Category Archives: State & Local Finance

Voters Keep the Doors Open: Library Referenda 2011

Source: Beth Dempsey, Library Journal, April 2, 2012

The referenda landscape of 2011 was punctuated by strong voter support to keep library doors open–but little more. Libraries took a cue from three long years of budget cuts, a struggling economy, dwindling consumer confidence, and weary taxpayers and ventured out to voters with markedly restrained requests.

At a cursory glance the numbers for operating referenda seem positive. Fully 88 percent of libraries that asked their communities to fund them were rewarded with a “yes.” In fact, the 2011 passage rate for operating referenda hit a ten-year high.

Looking deeper at the numbers, however, provides sobering context. Voters approved smaller amounts last year than in years 2002 through 2008 and even 2010. In 2011, the average operating referenda was under $900,000. Remove a standout $50 million vote in Los Angeles, and the average drops to under $800,000. Consider that next to the ten-year high, which occurred in 2008, when the average referendum was valued at more than $4 ­million.

State and Local Governments’ Fiscal Outlook: April 2012 Update

Source: U.S. Government Accountability Office, GAO-12-523SP, April 2, 2012

From the summary:
The state and local government sector continues to face near-term and long-term fiscal challenges that grow over time. The fiscal challenges confronting the state and local sector add to the nation’s overall fiscal challenges. The fiscal situation of the state and local government sector has improved in the past year as the sector’s tax receipts have slowly increased in conjunction with the economic recovery. Nonetheless, total tax receipts have only recently returned to the prerecession levels of 2007 and the sector still faces a gap between revenue and spending. The sector faces long-term fiscal challenges that grow over time. The fiscal position of the sector will steadily decline through 2060 absent any policy changes.

Government Fleets’ Costs Driven Down with Technology Tools

Source: Katherine Barrett & Richard Greene, Governing, Smart Management, April 2012

Cities, counties and states aren’t generally concerned about the color of the vehicles in their fleets. But a host of trade-offs are necessary to make sure their fleets are well maintained and able to deliver high-quality service. Recent fleet management efforts are beginning to focus on administrative techniques and technology tools that can bring down the cost and improve efficiency and quality of service.

The Other Debt Crisis – Public universities will take on more debt as states decrease spending on capital projects

Source: Kevin Kiley, Inside Higher Ed, April 10, 2012

Burdened by aging campuses, several years of backlogged maintenance projects, increased competition for students (and the tuition revenue that comes with them), and little hope that states are going to fund the construction they need, either through appropriations or by issuing their own debt, public colleges and universities are likely to issue their own debt to finance the renovation of their facilities — a change that moves public institutions closer to their private counterparts, could change what institutions build and repair, and could pass more costs on to students….

…For institutions that can take on more debt — those that have low debt loads or are growing enrollments and revenues, typically flagship universities — the financing change will have little impact on their bottom lines. They might have less money to spend on other priorities, but most expect revenues to keep pace with the amount of debt they’re assuming.

But other public institutions aren’t so lucky. Many can’t issue cheap debt, either because they’ve run up against statutory limits or because their internal finances won’t let them.
See also:
U.S. Higher Education Outlook Mixed in 2012
Source Moody’s Investor Service, Industry Outlook, January 20, 2012

The Impact of State Income Taxes on Low-Income Families in 2011

Source: Phil Oliff, Chris Mai, and Nicholas Johnson, Center on Budget and Policy Priorities April 4, 2012

From the summary:
The successful bipartisan effort over the last two decades to reduce state income taxes on working-poor families has stalled and is in danger of reversing. No new states exempted working-poor families of four from income taxes in 2011, and in almost all of the 15 states where such families still pay income taxes, they saw their income taxes increase.

Taxing the incomes of working-poor families runs counter to decades of efforts by policymakers across the political spectrum to help families work their way out of poverty. The federal government has exempted such families from the income tax since the mid-1980s, and a majority of states now do so as well. Since 1991, the number of states with income taxes on working-poor families of four has fallen from 24 to 15, and even in most of the remaining 15 states, the income tax liabilities of these families have declined significantly since the 1990s. Poor families paid income tax bills of several hundred dollars in 2011 in eight states. A two-parent family of four with annual income at the poverty line (which is $23,018 for a family of that size) owed $548 in Alabama, $509 in Illinois, $331 in Hawaii, $274 in Oregon, and $273 in Georgia. Other states levying taxes of more than $200 on families with poverty-level incomes were Indiana, Iowa, and Montana. Such amounts can make a big difference to a family struggling to escape poverty.

Some states went further and levied income tax on working families in severe poverty. Five states — Alabama, Georgia, Illinois, Montana, and Ohio — taxed the income of two-parent families of four earning less than three-quarters of the poverty line, or $17,264. Four states — Alabama, Georgia, Illinois, and Montana — taxed the income of one-parent families of three earning less than three-quarters of the poverty line, or $13,442.

Another 24 states required families of four with income just above the poverty line to pay income tax in 2011. There is strong evidence that even income modestly above the poverty line is often insufficient to meet families’ basic needs, and so there is a strong case to be made for exempting near-poor families as well.

What States Can, and Can’t, Teach the Federal Government about Budgets

Source: Tracy Gordon, Brookings Institution, March 2012

From the summary:
This policy brief examines potential budgeting lessons for the federal government from the states. After some background on state and local government finances, it reviews how states addressed major budget shortfalls. It next considers the effectiveness of state balanced budget requirements and other restrictive fiscal institutions. The brief concludes by exploring differences between state and federal policy environments and limits to generalizing from state experiences.

2011 4th Quarter Summary of State and Local Government Tax Revenue

Source: U.S. Census Bureau, G11-QTAX4, March 22, 2012

From the summary:
This summary shows quarterly tax revenue statistics on property, sales, license, income and other taxes. Statistics are shown for individual state governments as well as national estimates of total state and local taxes, including 12-month calculations. This quarterly survey has been conducted continuously since 1962.
See also:
Table 1 – Latest National Totals of State & Local Taxes
Table 2 – Latest National Totals of State Tax Revenue
Table 3 – Latest State Tax Collections by State

State Higher Education Finance FY 2011

Source: State Higher Education Executive Officers (SHEEO), March 2012

State and local government financial commitment to higher education has increased substantially over the past twenty-five years. In 1986, state and local governments combined provided $31.4 billion in direct support for general operating expenses of public and independent higher education institutions. This investment increased to $47.8 billion in 1996, $77 billion in 2006, and $88.8 billion by 2008.

A recession beginning in 2008 dramatically reduced state revenue and ended the growth in state and local support achieved between 2004 and 2008. In response, the American Recovery and Reinvestment Act approved February 17, 2009 provided funding to stabilize state support for education among other interventions to achieve economic recovery. With the approval of the Secretary of Education, funds allocated to the states by Congress could be used to supplement state and local funding for education in 2009, 2010, and 2011.

In 2011, 31 states provided ARRA funding to their higher education systems totaling $2.8 billion, helping to offset reductions in state and local support since 2008. State and local support in 2011 including ARRA funds totaled $87.5 billion, actually showing a 2.5 percent increase in funding for higher education over 2010 (although still below 2008 and 2009). The stability in support for higher education is an indicator that ARRA funding has served its purpose in minimizing the negative effects of the economic recession on higher education.

Report of the Executive Committee on the Impact of Recent Budget Cuts in New York State Court Funding

Source: New York State Bar Association (NYSBA), January 2012

Although courthouse architecture historically has inspired confidence in our court system, adequate funding is essential at the present time to rebuild an eroded sense of public confidence. The impact of reductions in funding for New York State courts during the 2011-2012 year has been substantially harmful and far-reaching.

• First, the courts are less efficient, and judicial decision making is less expedient…
• Second, the need to provide justice to all, particularly to the disadvantaged – though greater than ever in this economic downturn – is not being met…
• Third, the courts’ ability to protect and serve the public has been negatively impacted…

In all of these ways, recent reductions in state court funding have been quite costly. Although state fiscal constraints are very real in this economy, additional and imminent investment in the state court system is necessary. It is necessary to restore a sense of confidence in the judicial system, which ultimately is priceless.
Justice Delayed, Lawyers Unpaid?
Source: Jennifer Smith, Wall Street Journal, Law Blog, February 9, 2012

The Feminization of Austerity

Source: Mimi Abramovitz, New Labor Forum, Vol. 21 no. 1, Winter 2012
(subscription required)

The current attack on public sector unions is the latest step in a long-term effort to “end big government” through a three-pronged strategy that falls heavily on women. The strategy targets three public sector groups: service users, workers, and unions. Yet most of the prevailing analysis focuses on one group or another and thus misses the whole story and the strategy’s wider impact, particularly on white women and women of color–the people who comprise the majority of public sector program users, workers, and union members. This is largely a result of the gender division of labor…