Category Archives: State & Local Finance

FY 2018 Budget Blueprint Cuts Many Grants, Provides Increase to Defense

Source: Federal Funds Information for States (FFIS), Budget Brief 17-05, March 17, 2017
(subscription required)

From the summary:
The president’s budget blueprint for fiscal year (FY) 2018, America First: A Budget Blueprint to Make America Great Again, provides top-line discretionary spending levels for federal agencies with some specific details. It does not propose funding levels for most discretionary programs, or information on mandatory spending and revenues.
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Spreadsheet

States Perform

Source: Council of State Governments, 2017

States Perform provides users with access to interactive, customizable and up-to-date comparative performance measurement data for 50 states in six key areas: fiscal and economic, public safety and justice, energy and environment, transportation, health and human services, and education. Compare performance across a few or all states, profile one state, view trends over time, and customize your results with graphs and maps.

Show Us the Local Subsidies: A Second Evaluation of City and County Online Disclosure Practices of Economic Development Subsidy Programs

Source: Kasia Tarczynska, Good Jobs First, March 2017

From the blog post:
More than half of the nation’s 50 biggest cities and counties still fail to disclose online even the names of the companies receiving property tax abatements or other costly economic development incentives. Even fewer report incentive-deal outcomes: Only 13 of the 50 localities disclose the number of actual jobs created by one of their key incentive programs….

These are among the key findings of Show Us the Local Subsidies, a report issued today issued today by Good Jobs First, a non-profit watchdog group. ….
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Press Release

2017’s Tax Rates by State

Source: John S. Kiernan, WalletHub, March 14, 2017

Tax season can be stressful for many Americans, especially those who owe money to Uncle Sam. Every year, the average U.S. household pays more than $5,700 in federal income taxes, according to the Bureau of Labor Statistics. And while we’re all faced with that same obligation, there is significant disparity when it comes to state and local taxes. Taxpayers in the most tax-expensive states, for instance, pay three times more than those in the cheapest states to meet their civic burden.

As this year’s tax-filing deadline, April 18, looms closer, it’s fair to wonder which states have the most and least burdensome tax rates. WalletHub’s analysts searched for answers by comparing state and local tax rates in the 50 states and the District of Columbia against national medians. To illustrate, we calculated relative income-tax obligations by applying the effective income-tax rates in each state and locality to the average American’s income. Scroll down for the complete ranking, commentary from a panel of tax experts and a full description of our methodology….

Source: WalletHub

Good Intentions versus Effective Outcomes: An Analysis of Selected New Mexico Tax Incentives

Source: Greg LeRoy, Thomas Cafcas and Philip Mattera of Good Jobs First, and Lisa Christensen Gee and Dylan Grundman of the Institute on Taxation and Economic Policy, March 2017

From the blog post:
A study released today examining various tax incentives and tax accounting practices in New Mexico found that the state could gain more than $206 million per year by enacting safeguards common in other states. The study also finds that New Mexico lags behind most other states in making public relevant information about its tax incentive programs.

Those are the main conclusions of “Good Intentions versus Effective Outcomes,” a study released today by Good Jobs First, a non-profit, non-partisan research center.

With Amazon.com’s agreement to collect gross receipts tax on in-state sales, a fair application of the same tax to all online retailers could boost state revenues by almost $42 million. The state also has the opportunity to close a loophole that costs the state at least $27 million by fully enacting combined reporting (which prevents multi-state companies from shifting profits and tax burdens away from New Mexico). The study also recommends the phasing out of the High Wage Jobs Tax Credit program, which costs $70 million per year, and that the state also consider reversing a corporate income tax accounting rule (single sales factor apportionment) that costs the state $45 million per year and has not increased manufacturing jobs.
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Press ReleaseAbstract

235,000 Job Growth in February Is Good News for the Economy, But State and Local Government Job Growth Remains Weak

Source: Lucy Dadayan, Donald J. Boyd, Rockefeller Institute of Government, By The Numbers, March 2017

• Nationally, state and local government employment is 1.5 percent below its prior peak, while private sector employment is 6.4 percent above its prior peak.
• State government employment nationally is 2.5 percent below its peak level and local government employment is 1.3 percent below its peak level.
• State government non-education employment, for services such as corrections, hospitals and other health care, public welfare, and highways, has fared the worst among the government subsectors —- currently, 5.5 percent below its peak even though the population has grown 6.9 percent over the same period.
• Local government education and non-education employment are 2.0 percent and 0.8 percent below their respective prior peaks, while elementary and secondary enrollment has risen by more than 2.0 percent during the same period.
• The only subsector that has grown is state government education employment for universities, colleges, and similar services; here employment is up 1.2 percent above the prior peak, but still far weaker than in previous economic recoveries.
• Although state and local government employment did not decline as much during the Great Recession as private sector employment, it has been recovering far more slowly and has regained the jobs lost to the Great Recession.

A New Panel Database on Business Incentives for Economic Development Offered by State and Local Governments in the United States

Source: Timothy J. Bartik, W.E. Upjohn Institute for Employment Research, Upjohn project no. 34435, February 2017

From the http://www.upjohn.org/models/bied/maps/ReportFinal.pdf“>summary:
This report outlines a new database that contains better information on state and local business taxes and economic development incentives. It includes an explanation of how the database is constructed, and it subjects the database to some preliminary analyses to begin to answer questions about how incentives vary.

The report begins with a section providing context, including reviews of previous research. It then outlines the methodology and data sources for the database. The bulk of the report uses the database to describe incentives and how they vary by industry and state, over time, and by type of incentive. The report also considers how different policies alter net taxes after incentives, and it describes some simple correlations between taxes, incentives, and state economic characteristics and trends.

The accompanying appendices provide additional details on methodology and data, comparisons with other studies, time patterns of incentives and taxes for each state in the database, and much more.
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Appendices
Database

Public Pension Plan Investment Return Assumptions

Source: National Association of State Retirement Administrators, NASRA Issue Brief, February 2017

From the introduction:
As of September 30, 2016, state and local government retirement systems held assets of $3.82 trillion. These assets are held in trust and invested to pre-fund the cost of pension benefits. The investment return on these assets matters, as investment earnings account for a majority of public pension financing. A shortfall in long-term expected investment earnings must be made up by higher contributions or reduced benefits.

Funding a pension benefit requires the use of projections, known as actuarial assumptions, about future events. Actuarial assumptions fall into one of two broad categories: demographic and economic. Demographic assumptions are those pertaining to a pension plan’s membership, such as changes in the number of working and retired plan participants; when participants will retire, and how long they’ll live after they retire. Economic assumptions pertain to such factors as the rate of wage growth and the future expected investment return on the fund’s assets.

As with other actuarial assumptions, projecting public pension fund investment returns requires a focus on the long-term. This brief discusses how investment return assumptions are established and evaluated, compares these assumptions with public funds’ actual investment experience, and the challenging investment environment public retirement systems currently face.

The Role of Constituency, Party, and Industry in Pennsylvania’s Act 13

Source: Bradford H. Bishop, Mark R. Dudley, State Politics & Policy Quarterly, OnlineFirst, First Published December 1, 2016
(subscription required)

From the abstract:
While a large body of research exists regarding the role of industry money on roll-call voting in the U.S. Congress, there is surprisingly little scholarship pertaining to industry influence on state politics. This study fills this void in an analysis of campaign donations and voting during passage of Act 13 in Pennsylvania during 2011 and 2012. After collecting information about natural gas production in state legislative districts, we estimate a series of multivariate models aimed at uncovering whether campaign donations contributed to a more favorable policy outcome for industry. Our findings indicate that campaign donations played a small but systematic role in consideration of the controversial legislation, which represented one of the first and most important state-level regulatory reforms for the hydraulic fracturing industry.