Tag: state budgets

With Congress poised to give states and local governments $350 billion, pandemic budget hit for many was smaller than predicted

Mary Pat Campbell

Link: https://www.cnn.com/2021/03/05/politics/state-budgets-covid-relief-package/index.html

Excerpt:

“If the point of the stimulus bill is to just prevent state and local governments from having to cut back on spending or having to implement tax increases, then the $350 billion is way too much,” said Dan White, director of public-sector research at Moody’s Analytics. “Is that money better spent directly in terms of federal fiscal stimulus, as opposed to it flowing through states? If you use that money for PPP or for enhanced unemployment insurance, does it have a bigger bang for the buck in terms of economic stimulus?”

Moody’s Analytics now pegs the state and local budget shortfall at $61 billion when taking existing federal help into account. The left-leaning Center on Budget and Policy Priorities recently estimated that the budget gap is around $225 billion, but it noted that that doesn’t include states’ and localities’ costs to continue fighting the virus or helping their struggling residents and businesses.

Author(s):  Tami Luhby

Publication Date: 5 March 2021

Publication Site: CNN

Editorial: The dangers of an oversized stimulus package and a lesson from Illinois — yes, Illinois!

Mary Pat Campbell

Link: https://www.chicagotribune.com/opinion/editorials/ct-editorial-stimulus-payments-1400-economy-20210210-3jtgubimtjgi5deaigdplzilpe-story.html#new_tab

Excerpt:

Look at Illinois, of all places. Next week, Gov. J.B. Pritzker plans to introduce his budget for the next fiscal year. While the details are sketchy, his office estimates the state will need to close a $3 billion deficit, less than the $5.5 billion his office originally estimated. A stronger than expected economy is partly due the credit. While closing a $3 billion hole is not great news, we’ll take what we can get around here.

Yet, rather than take into account rosier economic pictures states like Illinois are projecting, Democrats in Washington are pressing for another big spending bill, even as they juggle the other big news of the week, the start of former President Donald Trump’s impeachment trial in the Senate. They insist an undersized response during the Great Recession slowed that recovery. But keep in mind during that far worse slump, President Barack Obama’s stimulus program had a price tag around $800 billion. Since the pandemic hit, by contrast, Congress has responded with $4 trillion in new outlays.

Does that sound like “too little?” More than $1 trillion of that sum has not even been spent yet, according to the Committee For a Responsible Federal Budget.

Author(s): Editorial board

Publication Date: 10 February 2021

Publication Site: Chicago Tribune

Red State Budgets Are Suffering The Most In This Recession

Mary Pat Campbell

Link: https://www.forbes.com/sites/lizfarmer/2021/02/18/red-state-budgets-are-suffering-the-most-in-this-recession/?utm_source=newsletter&utm_medium=email&utm_campaign=follow&cdlcid=5f3d53896be319c3c36cff29&sh=7f2620337b69

Graphic:

Excerpt:

Of those states suffering at least a 3% drop in revenue since the start of the pandemic in March 2020, two-thirds (eight in 12) are red states. Alaska, Florida, North Dakota and Texas are seeing some of the worst revenue losses of 9% or higher over the comparable period in 2019, according to the latest data from the Urban Institute.

Across the 47 states from which the institute has full data, total state tax revenues were down by $14 billion in the first ten months of the pandemic (between March and December 2020) compared to the same period a year earlier. That’s an average drop of 1.8% and is largely driven by declines in sales tax revenue.

Author(s): Liz Farmer

Publication Date: 18 February 2021

Publication Site: Forbes

Tony Evers’ budget takes nearly $2 billion chunk out of state’s improving financial situation

Mary Pat Campbell

Link: https://madison.com/wsj/news/local/govt-and-politics/tony-evers-budget-takes-nearly-2-billion-chunk-out-of-states-improving-financial-situation/article_8afbb2a3-a23e-5708-ac8f-cba55bf50081.html

Excerpt:

Gov. Tony Evers’ biennial budget proposal fulfills many Democratic priorities with big spending increases, but Republicans have raised concern that the $91 billion proposal would almost entirely drain the state’s coffers — by close to $2 billion — and leave Wisconsin in a more precarious financial position down the road.

The state is projected to have a nearly $2 billion surplus in its general fund by the end of the year, but Evers’ projected budget, which includes $1.6 billion in new tax revenue from marijuana, big manufacturers and the wealthy, still reduces that to around $143 million by mid-2023.

“It’s not necessarily inappropriate to draw down a big chunk of your reserves when you’re facing a once-in-100-years pandemic,” Wisconsin Policy Forum research director Jason Stein said. “You don’t have the reserves just to put them on a wall and admire them, but at the same time … you have to think about what’s going to be sustainable for the state budget because some of these challenges are not just going to evaporate either.”

Author(s): Mitchell Schmidt | Wisconsin State Journal , Riley Vetterkind | Wisconsin State Journal

Publication Date: 21 February 2021

Publication Site: Wisconsin State Journal

Opinion: The Democrats are still taxing their way out of Connecticut’s budget problems

Mary Pat Campbell

Link: https://www.courant.com/opinion/op-ed/hc-op-dem-budget-more-taxes-20210221-sjv6nz4kqffu3hrdrukk7lwcce-story.html

Excerpt:

Lamont’s budget does nothing to address the fact that Connecticut has some of the highest property taxes in the country. This massive tax burden hurts young families looking to settle down and grow; it hurts small businesses that have already been crushed by the pandemic; and it pushes seniors to find greener and cheaper pastures for retirement. The average Connecticut homeowner pays an astounding $5,327 per year — the highest property tax rate in New England. This puts us at a competitive disadvantage when our neighbors in New York and Massachusetts have more affordable property tax rates.

Nor does the governor do anything to address the structural budget deficits looming just over the hill. Instead, he reminds us we have a well-funded rainy-day fund and friends in Washington to bail us out. When your strategy is to drain your reserves and count on a global pandemic, you, in fact, have no strategy.

Author(s): Themis Klarides

Publication Date: 21 February 2021

Publication Site: Hartford Courant

WEAK ACCOUNTING STANDARDS ENABLE ILLINOIS BUDGET DEFICITS

Mary Pat Campbell

Link: https://www.illinoispolicy.org/weak-accounting-standards-enable-illinois-budget-deficits/

Excerpt:

Bad accounting has helped Illinois politicians avoid balancing the budget for 20 years, despite a constitutional requirement to pass a balanced budget each year. Government accounting standards that fail to offer transparency and accuracy in financial reporting have also contributed to the state’s $260 billion pension crisis, the primary reason Illinois has the lowest credit rating any state has ever received.

The Governmental Accounting Standards Board has proposed changes it calls “improvements” to the accounting standards for governments. However, watchdog groups such as Truth in Accounting have criticized the proposed changes and urged the adoption of more stringent standards that would require governments to balance their budgets the way most businesses are required to do. Illinois has grown accustomed to using lax accounting methods to hide its budget deficits, racking up debt year after year. The state’s taxpayers would benefit from tougher standards that impose fiscal discipline.

Author(s): Justin Carlson

Publication Date: 19 February 2021

Publication Site: Illinois Policy Institute

As Federal Aid Stalled, State And Local Governments Issued Bonds To Pay Current Bills

Mary Pat Campbell

Link: https://www.forbes.com/sites/lizfarmer/2021/01/30/as-congress-stalled-on-a-relief-package-governments-relied-on-borrowing-to-pay-the-bills/?

Excerpt:

Between August and mid-December of 2020, at least one-quarter of large bond issuances in the municipal market involved some form of deficit financing, according to an analysis by Municipal Market Analytics (MMA). The firm analyzed 442 municipal bond issuances that totaled at least $100 million.

MMA’s Matt Fabian and Lisa Washburn added that their tally was conservative and that as many as half of those 442 issuances may have involved deficit financing because the ultimate use of the money wasn’t always clear.

“These are not typical uses of the municipal bond market, where an overwhelming majority of financing is for long-term infrastructure projects,” they told the Pew Charitable Trusts. “But last year, with state and local governments seeking as much as possible to avoid cutting spending, raising taxes, or postponing pension payments, they shifted their emphasis to short-term and temporary solutions. As the pandemic continued and federal stimulus money dried up, they increasingly took on debt for budgetary help.”

Author(s): Liz Farmer

Publication Date: 30 January 2021

Publication Site: Forbes

Editorial: Get tough, Gov. Pritzker, on AFSCME

Mary Pat Campbell

Link: https://www.chicagotribune.com/opinion/editorials/ct-edit-fixing-illinois-chicago-budget-afscme-furlough-20210215-b6odtzttd5cjfkwu6vrde3e3be-story.html#new_tab

Excerpt:

Gov. J.B. Pritzker is scheduled to outline his budget plan on Wednesday for the fiscal year that starts July 1. It should include sacrifice from the nearly 40,000 state workers whose jobs have not been at risk like millions in the private sector and who got generous pay raises, funded by taxpayers, during the pandemic when Illinois’ unemployment soared to 16%. It is high time the state’s unionized workforce be part of the “shared sacrifice” our politicians so often expect of the private sector workforce.

….

While sectors of the state workforce have been extra busy due to COVID-19’s strain on unemployment benefits and health care systems, many state offices and agencies have been closed, services backlogged and workers learning to perform their jobs from home. Taking unpaid furlough days should not be a big “ask” compared with what the private sector has endured under Pritzker’s shutdown orders — restaurants, hotels, convention business, sports and marketing jobs — entire industries sidelined and in some cases, wiped out.

Other blue state governors confronted their unionized workforces months ago and showed leadership in doing so. Democratic governors in Wisconsin, California and New York cut public sector pay, instituted across-the-board spending cuts throughout state government, froze hiring and scheduled raises, and prepared for what would become a nearly yearslong economic slump due to COVID-19. They did it to protect all taxpayers.

Author(s): Editorial board

Publication Date: 15 February 2021

Publication Site: Chicago Tribune

As Cuomo Banks on Federal Funds, Localities Grow Nervous

Mary Pat Campbell

Link: https://www.governing.com/finance/As-Cuomo-Banks-on-Federal-Funds-Localities-Grow-Nervous.html

Excerpt:

 Receive from above, take from below. Such is the essence of one theme of the 2021 state budget plan unveiled last week by New York Gov. Andrew M. Cuomo.

The Democratic governor’s budget plan has a basic premise: Red ink will be washed away only if his request for a bailout from the federal government happens.

Cuomo’s new budget assumes the federal government will give New York at least $6 billion over two years as part of a broader $1.9 trillion Covid-related stimulus package being negotiated by Democratic President Joseph Biden and the Democratic-led Congress.

Author(s): TOM PRECIOUS, THE BUFFALO NEWS

Publication Date: 25 January 2021

Publication Site: Governing

States of Budget Surplus

Mary Pat Campbell

Link: https://www.wsj.com/articles/states-of-budget-surplus-11612999662?mod=opinion_lead_pos2

Excerpt:

Governors—especially from Democratic states—have been pleading revenue poverty since the pandemic began. But as we approach the anniversary of Covid-19 in America, that tall tale is becoming more difficult to sell.

Even the left-tilting media are beginning to figure out what we’ve been reporting for some time. One of our sources is Dan Clifton, of Strategas Research Partners, who has been tracking state revenue trends and Covid relief from the beginning. His latest analysis shows that state revenues have been doing far better than advertised, especially states that have kept their economies largely open.

He estimates that a majority of the 50 states are seeing revenues arrive above their pre-Covid levels despite the 2020 economic damage. The big exceptions are states that had the most restrictive business lockdowns (New York), those that rely on sales taxes and have no income tax (Florida and Texas), and those that depend on travel and tourism (Nevada).

Author(s): Editorial board

Publication Date: 10 February 2021

Publication Site: Wall Street Journal

Pritzker said the failure of his graduated-rate income tax would leave Illinois with two options. He’s eliminated both of them.

Mary Pat Campbell

Link: https://www.chicagotribune.com/politics/ct-jb-pritzker-illinois-budget-proposal-20210214-bjbay24vpvggfpg2urhbn4ojsy-story.html#new_tab

Excerpt:

Gov. J.B. Pritzker long warned that without his graduated-rate income tax, which voters rejected in November, Illinois would be left with only two options to address its chronic budget problems: raising income taxes or double digit across-the-board spending cuts.

But ahead of his budget address to lawmakers Wednesday, Pritzker outlined a state spending plan that would neither raise the income tax or alter the total budget outlay.

He did call for closing $900 million in unspecified “corporate tax loopholes,” which opponents are already labeling a tax hike on businesses in the middle of the coronavirus pandemic.

What remains to be seen is whether the governor will look to other avenues to increase revenue, although his options appear limited. He has opposed two of the leading options favored by some budget watchers: instituting a tax on retirement income and applying the sales tax to some services.

Author(s): DAN PETRELLA

Publication Date: 14 February 2021

Publication Site: Chicago Tribune

Illinois’ budget problems won’t be fixed without change in revenue structure

Mary Pat Campbell

Link: https://www.dailyherald.com/discuss/20210212/illinois-budget-problems-wont-be-fixed-without-change-in-revenue-structure#new_tab

Excerpt:

For starters, it left Illinois stuck with its long-standing, flat rate income tax. This outcome was something other than desirable, given the central role this flat rate income tax has played in driving Illinois’ incessant, and substantial, General Fund deficits.

How substantial? Current estimates are the General Fund deficit will reach $13 billion by the end of FY 2022 — which means Illinois won’t have the revenue needed to cover almost half of anticipated FY 2022 expenditures on services. That’s a real cause for concern, given over 95 percent of all General Fund spending on services goes to the four, core areas of education, health care, human services, and public safety.

Sure, a portion of this deficit will resolve itself once the revenue shortfalls caused by the pandemic end. That said, the crux of Illinois’ fiscal problems have nothing to do with COVID-19, and everything to do with structural flaws in the state’s tax policy — the flat rate income tax being key among them.

Author(s): Ralph Martire

Publication Date: 12 February 2021

Publication Site: Daily Herald