Category Archives: State & Local Finance

One Seneca Falls – from Concept to Reality

Source: Scott Sittig, Center for Governmental Research, Policy Wonk blog, February 29, 2012

On January 1, 2012, the Town of Seneca Falls became a unified municipality for the first time since 1831. Communities across New York State have their eye on Seneca Falls to see what lessons can be learned from the dissolution of the historic village. As the largest village to dissolve in New York State, the process and outcomes will serve as a great test case for many years to come. However, some may be prone to draw conclusions from the outcomes that aren’t warranted.

Fiscal Incidence when both Individual Welfare and Family Structure Matter: The Case of Subsidization of Home-Care for the Elderly

Source: Haizhen Mou, Stanley L. Winer, CES IFO Working Paper No. 3731, Category 1: Public Finance, February 2012

From the abstract:
How should we construct incidence indexes for children and parents in the case of public subsidies for home-care of the elderly? What is the nature of a fiscal incidence index on a budgetary basis versus a theoretically more satisfactory index that is welfare-based? Can we find budgetary based measures that will serve as a proxy for incidence in welfare terms? Does the structure of the family including the altruism of children affect incidence indexes? How should fiscal shifting of the subsidy for home care paid to the parents be defined, in budgetary or in welfare terms, and what does simulation tell us about the distribution of benefits between the generations?

We address these issues analytically and with simulation (using data from the Medical Expenditure Panel Survey) in this contribution to the study of fiscal incidence. The definition of welfare incidence, the comparison of welfare-based incidence with budgetary incidence for non-cooperative and cooperative families, and the calculation of the shifting of program benefits between family members, some of whom may be altruistic, are key issues in the analysis. The integration of individual welfare, family structure and benefit shifting provides a new perspective on the fiscal incidence of home care programs.

Coping with Crisis: How are Local Governments Reinventing Themselves in the Wake of the Great Recession?

Source: Carl W. Stenberg, International City/County Management Association (ICMA), Policy Issue White Paper, December 2011

From the summary:
As the economic recession deepens, the nation’s local governments have moved beyond a “business as usual” approach to cutting costs and improving efficiency. The premise for this paper is that America’s cities, towns, and counties are currently in the process of reinventing themselves now that the easy measures have been adopted. This paper examines the scope of strategies considered by local governments using keywords from daily ICMA News Briefings from April 15, 2009 to April 15, 2011. According to the results of the research:

– The majority of proposals were aimed at cutting expenditures rather than raising revenue.
– Elected officials are examining the provision of core local services, but remain reluctant to enter into collaborative arrangements with other jurisdictions or private service providers.
– Most of the responses collected were conventional and incremental as opposed to bolder, innovative strategies, though this could change in the coming years.

Charting New Waters: Financing Sustainable Water Infrastructure

Source: Johnson Foundation at Wingspread, January 2012

Our nation’s freshwater infrastructure faces a critical juncture. Largely built on systems developed during the 19th and early 20th centuries, our water infrastructure is aging, our technology outdated and our governance systems ill equipped to handle rising demand and environmental challenges. Additional strain is being placed on these systems from a variety of sources, including pressures from urbanization and changing climate conditions, such as increases in both droughts and extreme one-day precipitation events.

While these challenges are significant, they are not insurmountable. In fact, they can be viewed as drivers of much-needed change in how we finance and develop our water systems to meet future demands. New financing models and pricing flexibility, which are necessary to pay for new infrastructure and to support legacy systems, provide enormous opportunity for positive transformation necessary to keep pace with the rapid changes being experienced by counties, municipalities and investor owned utilities.

This report seeks to tackle these issues and deliver some recommendations on how to understand and confront the pressing need for more sustainable and integrated water infrastructure financing models.

Facts You Should Know: 2012 Fact Sheet / State and Municipal Bankruptcy, Municipal Bonds, and State and Local Pensions

Source: NGA – National Governors Association, NCSL – National Conference of State Legislatures, CSG – The Council of State Governments, NACo – National Association of Counties NLC – National League of Cities, USCM – The U.S. Conference of Mayors, ICMA – International City/County Management Association, NASBO – National Association of State Budget Officers, NASACT – National Association of State Auditors, Comptrollers and Treasurers, GFOA – Government Finance Officers Association, NASRA – National Association of State Retirement Administrators, 2012

From the summary:
State and local government officials want you to know something: Yes, budgets are tight these days, but their overall financial picture is still solid. That is the message from a new fact sheet, “Facts You Should Know,” released by the International City/County Management Association (ICMA) and 10 other state and local government organizations….

The fact sheet makes the case, citing among other factors:
– Municipal bond defaults are rare. From 1970 through 2011, only five rated city or county governments defaulted. Of the 65 rated municipal bond defaults during this period, most were for not-for-profit hospitals or housing projects. Municipal securities are considered second only to Treasuries in investment safety.
– Most state and local pension systems have assets to weather the economic crisis, with nearly $3 trillion in pension trusts.
– Officials are working to improve their finances. State and local governments “have made changes to benefit levels, contribution rate structures, or both since 2009,” according to the news release.

Bill for Inadequate Unemployment Insurance Taxes Now Coming Due in Many States

Source: Michael Leachman, Center on Budget and Policy Priorities, Off the Charts Blog, January 30, 2012

Businesses in 20 states must make the first payment tomorrow on about $35 billion that these states have borrowed from the federal government in recent years to help pay unemployment insurance (UI) benefits.

Most of this borrowing happened because many states kept the business taxes that fund UI benefits too low before the recession, leaving their UI reserves ill prepared for an economic slump.