Source: Paul E. Miller, West Virginia Center on Budget and Policy, February 2009
West Virginia spends millions of dollars annually on public subsidies to private businesses in hopes of creating good-paying jobs. Yet evidence abounds of private companies cutting jobs after receiving state tax credits and low-interest loans. In extreme cases, corporations have gained or used their subsidies illegally, as in the indictment last year of the former chief executive of Sequelle Communications. More common, however, are companies that simply fail to deliver on their job-creation promises, often without consequences from the public agencies that fund them.
Accountability for Economic Development Subsidies
This report examines ways for the state to improve the return on its job-creation investments. Two specific issues are explored: the availability of information to policymakers and the public about business subsidies (transparency), and how well the recipients of business subsidies deliver on their pledges to create jobs (accountability).
Source: Roxana Radulescu, Martin Robson, Labour, Vol. 22, Issue 4, December 2008
From the abstract:
Conventional wisdom is that a high trade union bargaining strength and a system of coordinated wage bargaining reduce the attractiveness of an economy as a location for foreign direct investment, although there is limited evidence for this. The paper takes panel data for 19 OECD economies to examine the relationship between trade union bargaining strength, bargaining coordi nation, and a range of incentives for inward foreign direct investment. It finds a strong negative effect of trade union density on inward foreign direct investment, which is dependent on the degree of wage bargaining coordination. A high degree of coordination weakens the deterrent effect of high union density, which is consistent with the notion that under certain circumstances a coordinated increase in wages can increase profits of the multinationals by hurting domestic firms.
October 2006 version
Source: Sean Slone, Council of State Governments, CSG National Report, 2009
This report examines the transportation funding issues states are faced with, the finance options available to them, and how states can decide which options best fit into their transportation plans. It draws on the work of two federal commissions created by Congress–the National Surface Transportation Infrastructure Financing Commission and the National Surface Transportation Policy and Revenue Study Commission–as well as the research and assessment of numerous other transportation, law and tax policy analysts, expert panels, and state and federal officials.
Most states have begun to look at and even implement innovative ways to fund transportation. Their efforts come with the realizations that raising fuel taxes is politically difficult and that the future revenue yield from existing funding sources will be inadequate to maintain the nation’s existing transportation systems and to increase capacity for the future.
Source: Douglas W. Elmendorf, Congressional Budget Office, Testimony before the
Committee on the Budget United States Senate, January 28, 2009
A strong financial sector is a necessary component of a robust economy. Financial markets and institutions channel funds from savers to borrowers who need the money to build businesses and hire workers and to buy homes and other goods and services. Indeed, credit is often required to support the ordinary operations of businesses–for example, to finance their inventories and to meet payrolls before payments are received. If the customary means of obtaining credit break down, the disruption to
households’ and businesses’ spending can be severe.
Thus, the ongoing crisis in the U.S. financial system has significantly depressed economic activity during the past year and a half, and it poses a serious threat to the nation’s ability to quickly return to a path of solid economic growth. Losses on mortgages, on assets backed by mortgages, and on other loans to consumers and businesses, together with an associated pullback from risk taking in many credit markets,
have raised the cost and reduced the availability of credit for borrowers whose credit ratings are less than the very highest. To be sure, among the fundamental causes of the crisis was the provision of too much credit at too low a price as well as insufficient capital. However, the sudden shift to a much higher price for risk taking has led to a significant reduction in wealth and borrowing capacity; it has also forced a number of financial institutions to close and others to be merged with stronger operations. Those forces, in turn, are weighing heavily on consumption, the demand for housing, and businesses’ investment.
Source: Olga Kaganova, Urban Institute, April 2008
From the abstract:
The area of government property asset management is relatively new in public management. Most public wealth is concentrated in public property, and expenses associated with it constitute a substantial part of public budgets. The chapter ventures into two international “hot topics”: practical enhancement of public financial resources through better management of property asset and curbing corruption in the historically corrupt area of government-owned property. The chapter provides a conceptual and methodological framework for governmental decision-makers and their advisors and ends by formulating and discussing a number of issues that require further professional and public debate.
This chapter is published in Finding the Money: Public Accountability and Service Efficiency through Fiscal Transparency, Gabor Peteri (Editor), Open Society Institute (OSI), Budapest, 2008.
Source: Richard G. Little, Keston Institute for Public Finance and Infrastructure Policy, University of Southern California, December 2008
As this paper is written, the United States finds itself at the vortex of multiple converging forces that could change permanently the manner in which the nation’s civil infrastructure is funded and paid for. Simply put, there is recognized need for comprehensive reinvestment in the infrastructure of the United States and the magnitude of the shortfall between needs and spending is daunting. Taken together, annual investment in public and quasi-public infrastructure systems of 4 to 6 per cent of GDP ($500 – $700 Billion) will probably be necessary for the foreseeable future. At the same time, no funding source, either dedicated such as the Highway Trust Fund, or general, such as the Budget of the United States, is projected to have the capacity to generate funds sufficient for infrastructure investment at these levels. Private capital, broadly deployed through various forms of public private partnerships (PPP or P3) could address a portion of the shortfall but PPPs have generated considerable opposition in the U.S. and the long-term viability of this model in the face of the on-going financial crisis is unclear.
Source: Jane Wellman, Change, November-December 2008
The rich and famous are much in the news these days–colleges and universities that is, the ones with endowments in the hundreds of millions or more and whose run-up in assets has raised questions about their non-profit status from both state and federal lawmakers. The U.S. Senate Finance committee wants to know, for example, why institutions that are reported to average 20 percent annual increases in the market value of endowments of $500 million or more still need to raise tuition and fees every year. And the Internal Revenue Service is preparing for intensive audits of more than 400 institutions, looking at revenue-generating activities housed within them and how those activities fulfill the public or charitable purposes of the institutions. Meanwhile, legislation has been proposed in Massachusetts to levy state taxes on the Commonwealth’s wealthiest non-profit private institutions.
Source: National Association of College and University Business Officers (NACUBO) in Partnership with the Association of Governing Boards of Colleges and Universities (AGB), 2008
Colleges and universities are extraordinarily stable institutions, in part due to their mission and role in our society and in part due to how they operate and are managed. Nonetheless, the current financial downturn is impacting higher education institutions in a wide variety of ways.
The financial challenges described below are among the most pressing in recent times and will call on presidents, chief financial officers (CFOs) and boards to work together to address the near-term fiscal impact on the institution’s operations as well as longer term consequences.
Following the narrative is a series of questions that decision makers are asking of themselves and colleagues as they work through the current uncertain environment. Not all questions will apply to every institution equally. However, effective oversight, management and stewardship mandate that institutional leaders are able to assure themselves and their constituencies that thorough analysis and full consideration have been applied in posing questions, providing answers and making decisions.
Source: Jane V. Wellman, Association of Governing Boards of Universities and Colleges, 2008
College costs–how money is spent as opposed to where it comes from–have received relatively little attention compared with other aspects of higher education finance. Instead, most media and policy attention has been focused on rising tuitions, the intense competition for admission to selective institutions, the complex system of financial aid, and the eroding share of public revenues going to higher education. These concerns are leading to a renewed focus on institutional spending–and whether more can be done to manage costs without compromising quality or access.
Source: Jane V. Wellman, Donna M. Desrochers, Colleen M. Lenihan, Rita J. Kirshstein, Steve Hurlburt, Steve Honegger, Delta Cost Project, January 2009
From the summary:
The report, the second from the Delta Project on Postsecondary Costs, Productivity, and Accountability, examines revenue and expenditure data for nearly 2,000 public and private non-profit colleges and universities (representing more than 75 percent of higher education enrollment) and analyzes recent trends, focusing on the period from 2002 to 2006. It is the most up-to-date and comprehensive assessment of higher education finance in the nation.
– Presentation Summary
– Recommendations for Action
– Frequently Asked Questions
– State Data