Category Archives: State & Local Finance

How Much State Fiscal Relief is Enough?

Source: Stan Dorn, Urban Institute, January 15, 2009

From the abstract:
Between increased Medicaid caseloads, rising indigent care costs, and Medicaid’s share of state revenue losses, an economic downturn in the next two and a half years could impose between $74 billion and $118 billion in extra financial burdens on the 50 states, if unemployment averages between 8 and 10 percent. The amount Congress must spend to prevent state service cutbacks and tax increases depends on how fiscal relief is allocated. Basing each state’s funding on objective, economic indicators makes federal dollars go farther towards solving state fiscal woes, since more of the money benefits the states that most need help.

Navigating the Fiscal Crisis: Tested Strategies for Local Government Leaders

Source: Gerald J. Miller and James H. Svara, International City/County Management Association (ICMA), White Paper, January 2009

The developing fiscal crisis that city and county governments face calls for extraordinary action by local officials at all levels of government. However, there are lessons to be learned from research on previous downturns and what is known about how organizations achieve excellence and deal with adversity. ICMA commissioned this White Paper by researchers in the Academic Network of the Alliance for Innovation in order to better understand the nature of this fiscal crisis and what steps managers can take to pursue economic recovery. Key findings in the research address the following areas:

This economic crisis is deeper and more severe than what we have experienced in the past 50 years. While some U.S. regions and localities are experiencing the downturn differently, for the first time in the postwar era, all levels of government are impacted with dramatic revenue reductions simultaneously. In addition, this economy has all sectors of the private economy also in a tailspin. Events have already reached crisis levels in some cities and counties, and some say that “we are just at the end of the beginning” of dealing with the crisis. Still, local governments in other parts of the country are just starting to see how the crisis will affect their communities.

These governments can learn from past experience with cutbacks and the response of cities and counties already on the frontlines of the crisis. There are lessons to be learned from past stimulus programs. First and foremost is timing. Only one stimulus package – that of 2001 – was actually approved before the recession had officially ended. In addition, we know that:

• Tax cuts have less impact than cash grant to localities
• Capital project support has a greater impact than operating expenditure support
• Higher level government project and block grants speed recovery in comparison to formula grants

See also:
A web-based “wiki-blog” has been established for local government staff to share ideas on how to weather the economic crisis. Go to – click on the Fiscal Crisis icon.

ECONOMIC RECOVERY PACKAGES: State-by-State Estimates of Key Provisions Affecting Low- and Moderate-Income Individuals

Source: Center on Budget and Policy Priorities, January 30, 2009

The House and Senate economic recovery packages unveiled last week are designed to boost employment and the economy. They contain a number of spending and tax measures crafted to inject more aggregate demand into the sagging economy. This paper provides state-by-state estimates for most of the major spending and provisions that will affect low- and moderate-income Americans (some provisions cannot be allocated on a state-by-state basis). The Center will update this analysis as more information and details become available. The provisions in the two recovery packages are not identical and currently more detail is available on the House package than on the Senate package. Thus, each provision described below indicates whether the state-by-state estimates are for a House provision, a Senate provision, or whether the provisions in both packages are the same.

The paper provides short descriptions and tables with estimated state-by-state impacts of several key provisions. For each of the following proposals there is a short description of the proposed policy and the methodology for CBPP’s state-by-state estimates.

Protecting Public Safety During a Budget Crisis: Managing Corrections

Source: National Governors Association, December 16, 2008

The National Governors Association Center for Best Practices held the first in a series of webcasts on strategies aimed at maintaining public safety while reducing corrections expenditures. This webcast was made possible through a partnership with the Pew Charitable Trust Public Safety Performance Project.

The current economic crisis is forcing governors to take dramatic steps to balance state budgets in nearly all categories by laying off employees, cutting services, reducing overtime, and eliminating capital expenditures. However, the storm waters of the budget crisis will not crest until 2009. Tax revenues are forecasted to significantly drop and credit and bond markets will continue to tighten. Given such dire forecasts, governors need to be prepared to make even deeper cuts to core services including healthcare, education, transportation, and corrections. While making across-the-board budget cuts presents many difficult decisions, the challenges associated with making deep cuts to corrections is particularly daunting considering the potential for disastrous public safety outcomes.

Innovative State Transportation Funding and Financing: Policy Options for States

Source: David Burwell and Robert Puentes, National Governors Association, January 2009

From the press release:
The report, Innovative State Transportation Funding and Financing: Policy Options for States, outlines the challenges states face in funding transportation needs, and details a number of near- and longer-term policy solutions that states can examine.

The nation’s highways, roads, bridges, and transit systems currently are funded by an array of revenue sources, including fuel taxes, vehicle user fees, transit fares, impact fees, bonds, property and sales taxes, and general funds. However the total annual investment in surface transportation falls dramatically short of the amount needed to maintain the current system, let alone improve the status of the nation’s transportation infrastructure.

Proposed Funding for Education in the American Recovery and Reinvestment Act of 2009

Source: Rebecca R. Skinner, David P. Smole, Ann Lordeman, Wayne C. Riddle, Congressional Research Service, R40151, January 22, 2009

On January 15, 2009, the House Committee on Appropriations released a draft version of the American Recovery and Reinvestment Act of 2009 (ARRA). The primary purposes of the act focus on promoting economic recovery, assisting those most affected by the recession, improving economic efficiency by spurring technological advances in science and health, investing in infrastructure, and stabilizing state and local government budgets. As part of this act, funds would be provided to several existing education programs administered by the U.S. Department of Education (ED), including programs authorized by the Elementary and Secondary Education Act (ESEA) and the Individuals with Disabilities Education Act (IDEA). The ARRA would also create new programs that would support school construction at the elementary, secondary, and postsecondary education levels and provide general funds for education to support state fiscal stabilization. This report provides a brief overview of the key provisions related to education programs that are or would be administered by ED that were included in the act under Title IX (Labor, Health and Human Services, and Education) and Title XII (State Fiscal Stabilization Fund). It also provides estimates of state grants for programs for which these estimates are relevant and for which data needed to produce the estimates are available. The report will be updated as warranted by legislative action.

2009 Economic Stimulus: Details of the American Recovery and Reinvestment Act

Source: National Conference of State Legislatures, January 2009

2009 Economic Stimulus: Details of the American Recovery and Reinvestment Act are emerging. A new chart highlights the estimated state allocations for the House stimulus proposal.

The bill, approved by the Appropriations committee on January 22, includes $79 billion in state fiscal relief to prevent cutbacks to key services, including $39 billion to local school districts and public colleges and universities distributed through existing state and federal formulas, $15 billion to states as bonus grants as a reward for meeting key performance measures, and $25 billion to states for other high priority needs such as public safety and other critical services, which may include education.
See also:
2009 Economic Stimulus – main page

FY09 State Funding for Public Libraries

Source: American Library Association, 2009

2009 Survey of Chief Officers of State Library Agencies (COSLA), for the Public Library Funding & Technology Access Study

State Library Agencies play a critical role in sustaining public libraries. In recognition of this leadership role, the Public Library Funding & Technology Access Study includes an annual questionnaire of these agencies.

In December 2008, the questionnaire included a question asking about any declines or anticipated declines in FY09 state funding for public libraries. Ninety-six percent of states and the District of Columbia responded to the inquiry. The compiled results are listed here.

Economic Situation In The States

Source: Mike Griffith, Education Commission of the States, December 8, 2008

A recent PowerPoint presentation from ECS’ Senior Finance Policy Analyst Mike Griffith takes a
look at (1) The national and state economic situation; (2) How past economic downturns have impacted education spending; and (3) How education budgets will be impacted.

Nutcracker Effect’: The Fiscal Outlook For States

Source: Robert B. Ward, Nelson A. Rockefeller Institute of Government, April 26, 2008

Presentation to the National Education Writers Association’s 61st National Seminar, outlining the effects of falling property values, demographic trends, and inflation on school finance. State revenue data are provided by region and for selected states. Concludes that schools have three choices: raise taxes, cut services, and/or find ways to use resources more cost-effectively.