Category Archives: State & Local Finance

Public Education Finances: 2015

Source: U.S. Census Bureau, Educational Finance Branch, Report Number: G15-ASPEF, June 14, 2017

From the summary:
The U.S. Census Bureau conducts the Census of Governments and the Annual Surveys of State and Local Government Finances as authorized by law under Title 13, U.S. Code, Sections 161 and 182. The Census of Governments has been conducted every 5 years since 1957, while the annual survey has been conducted annually since 1977 in years when the Census of Governments is not conducted. The 2015 Annual Survey of School System Finances, similar to previous annual surveys and censuses of governments, covers the entire range of government finance activities—revenue, expenditure, debt, and assets (cash and security holdings).

This report contains financial statistics relating to public elementary-secondary (prekindergarten through grade 12) education. It includes national and state financial aggregates and displays data for the 100 largest school systems by enrollment in the United States….

State Revenues and the Aging Population

Source: Katherine Barrett and Richard Greene, PA Times, June 13, 2017

…. Not only are older people likely to need more services, especially health care; they also are inclined to bring in smaller amounts of revenue dollars, largely because their earned incomes tend to decline. Equally important, many states have tax laws that do not fully cover income from Social Security or pensions. This issue is growing in significance as the makeup of the population shifts. The number of U.S. residents over 65 is anticipated to grow by one-third over the next 15 years, according to the Census Bureau….

What Can Performance Information Do to Legislators? A Budget Decision Experiment with Legislators

Source: Labinot Demaj, Public Administration Review, Volume 77 Issue 3, May/June 2017
(subscription required)

From the abstract:
Studies on the influence of performance information on budgeting decisions have produced contradictory findings. This article offers a framework of the parliamentary context that links performance information to legislators’ budgeting decisions. The framework suggests that the impact on politicians’ allocations will differ depending on whether performance information is reflected in the budget proposal, whether the allocation issue concerns a politically difficult trade-off for the decision maker, and whether information falls into a receptive partisan mind. The experimental study uses 57 actual legislators. The results show that the introduction of performance information into legislators’ deliberation process leads to stronger deviations from the status quo allocation. This difference occurs because performance information highlights more clearly the expected consequences of budgetary changes and allows for more pronounced reactions. More informed decisions, however, might make compromise among legislators more difficult because individual positions will become more polarized.
Previous version:
What Can Performance Information Do to Legislators? A Budget Decision Experiment with Legislators
Source: Labinot Demaj, University of St. Gallen, Law & Economics Working Paper No. 2015-04, September 9, 2014

From the abstract:
Existing studies on the influence of performance information on budgeting decisions are limited and have produced contradictory findings. This paper argues that most previous work has somewhat problematically focused on self-reported use of performance information rather than on the legislative context into which performance information is introduced. This study offers a framework that links performance information to legislators’ budgeting decisions. I argue that the impact will differ depending on whether performance information is reflected in the budget proposal, whether the allocation issue concerns a politically difficult value tradeoff for the decision-maker, and whether the implications of the performance information fall into a receptive partisan mind. This paper studies these aspects by manipulating the first two of these factors in an experimental setting involving budgetary decision-making by 57 actual legislators. The control groups consist of 65 undergraduate students. The results show that the introduction of performance information into the legislators’ deliberation process leads to stronger deviations from the status quo allocation. I argue that this difference occurs because performance information highlights more clearly the expected consequences of budgetary changes and allows for more pronounced reactions. This paper concludes that more informed decisions based on good performance budgets might also create a situation in which it is more difficult for legislators to compromise because individual positions become more polarized.

State Tax Revenues in Flux

Source: Lucy Dadayan and Don Boyd, Rockefeller Institute of Government, State Revenue Report #107, June 2017

Today, the Rockefeller Institute of Government released a report finding that state and local government tax revenues continue to grow at an extremely slow pace. Specifically, the report finds that:
• State and local government revenue from major taxes increased 2.3 percent in the fourth quarter of 2016 compared to a year earlier, which is slightly slower than the 2.5 percent average growth for the four previous quarters.
• Local governments as a group rely heavily on property taxes, which are relatively stable but weakened somewhat in the fourth quarter, growing by 4.0 percent, compared with a 5.1 percent average in the prior four quarters.
• Total state government tax revenue from all sources grew 1.4 percent. This continues the weakness seen in recent quarters. It is slower than the 1.8 percent growth of the third quarter, and is slightly negative after adjusting for inflation. ….

State Budget Update – Spring 2017

Source: National Conference of State Legislatures, May 2017

From the introduction:
Nearly eight years after the end of the Great Recession, states are again facing budget challenges. Over the past few years, states have consistently struggled with slow revenue growth, and this year is no exception.

Many states describe their fiscal situation as stable in the near term, but slow revenue growth could lead to more fiscal challenges in the future, especially if there is a downturn in the national economy. Demographic changes, low energy prices, and a sluggish agricultural economy are also plaguing some state budgets. This report highlights results from NCSL’s most recent survey of legislative fiscal officers about state budget conditions

Facts Before Funding

Source: Allison Hiltz, State Legislatures Magazine, June 2017

Evidence-based policymaking can arm lawmakers with information about what works. ….

…. More than a buzzword, evidence-based policymaking is becoming a movement unto itself. A recently released report from the Pew-MacArthur Results First Initiative shows that all 50 states use evidence-based policymaking in some way. Many incorporate the findings from their in-depth analyses into their budgeting decisions, boosting funding for programs that not only work, but also provide a positive return on the tax money invested. ….

…. There are various reasons why states began shifting toward this method of policymaking, but one shared event had an influence on all: The Great Recession. …..

Annual Report Required by Act 2013-90: The Impact of Tavern Gaming on the Pennsylvania State Lottery

Source: Philip Durgin – Executive Director, Legislative Budget and Finance Committee, May 2017

Act 2013-90, an amendment to the Local Option Small Games of Chance Act, requires the Legislative Budget and Finance Committee to conduct an annual study of the impact of tavern gaming on the State Lottery. Under the act, the Governor may request the General Assembly to transfer money from the General Fund to the State Lottery Fund up to the amount identified in the study. This is the second report under this mandate. ….

When Act 90 was being debated, the Governor’s Office of the Budget estimated that 2,000 establishments would be licensed under the act, generating an average weekly payout of $10,000 per license. Using this assumption, the legislation was estimated to generate total annual net revenue of $156 million, which in turn would generate (at a 60 percent tax rate) $93.6 million in additional revenues for the General Fund annually. Actual state revenues, however, have been far lower. In CY 2014, tavern games generated approximately $153,000 in state tax revenue, increasing to $1.42 million in 2015 and $1.48 million in 2016. ….
Related:
Highlights
Presentation

Gaming fatigue? Pennsylvania tavern games fizzle
Source: Barrett and Greene (B&G) blog, June 5, 2017

One of the trickiest tasks in government is estimating the impact of new legislation…..

(Un) Ready for Retirement

Source: Anna Petrini, State Legislatures Magazine, June 2017

States face a costly future if their citizens fail to save enough for retirement.

Most Americans are not saving enough for retirement. The problem is especially severe among small-business employees, low-income workers and communities of color. On the brink of a national retirement security crisis, state lawmakers are stepping into the breach with a spectrum of innovative solutions.

Retirement planning experts have traditionally used the analogy of a three-legged stool to describe the common sources of retirement income: Social Security, employer-provided pensions and individual savings. But the stool has grown wobbly for many workers, particularly in the private sector. For one, fewer employers offer traditional pensions, which puts the onus on workers to save more themselves. Another issue is changing demographics—people are simply living longer and need to save more money as a result. A third concern: Just how secure is Social Security?

As state officials stare down the prospect of mounting costs if their citizens retire into poverty, they’re looking carefully at how to boost retirement savings. Should they create and facilitate new retirement savings programs for private sector workers or encourage participation in existing plans?….

The Diffusion of State Film Incentives: A Mixed-Methods Case Study

Source: Stephanie Leiser, Economic Development Quarterly, Online First, June 1, 2017
(subscription required)

From the abstract:
In 2000, only six states had tax incentives for film and video production, and by 2010, all but six states had film incentives. What accounts for this growth in popularity? This study combines quantitative event history analysis and qualitative interview methods to try to understand why states adopted film incentive programs and how they were influenced by the adoption of incentives in other states. The analysis suggests that the diffusion processes in state adoptions of film incentives can be largely explained by two factors: (a) the size and sophistication of the existing film industry in the state and (b) a competitive “bandwagon” effect based on the total number of states that had already adopted film incentives. The results emphasize the need to broaden the ways that competitive influences can be conceptualized and modeled in policy diffusion research, especially in economic development.