Category Archives: State & Local Finance

Why More Than A Million Teachers Can’t Use Social Security

Source: Cory Turner, NPR, All Things Considered, April 20, 2018

Teachers have staged protests in recent weeks in West Virginia, Oklahoma, Kentucky, Colorado and Arizona. Some are fighting lawmakers who want to scale back their pensions.

It’s no secret that many states have badly underfunded their teacher pension plans for decades and now find themselves drowning in debt. But this pensions fight is also complicated by one little-known fact:

More than a million teachers don’t have Social Security to fall back on.

To understand why, we need to go back to Aug. 14, 1935. That is when President Franklin Delano Roosevelt signed the original Social Security Act.

The Teacher Strikes Show That Workers Are Really, Finally, Fed Up

Source: Eillie Anzilotti, Fast Company, April 19, 2018

By walking out of their classrooms, U.S. teachers are part of a global uprising against low wages for the benefit of increasing corporate profits. ….

….Legislatures in more conservative states have granted tax cuts to corporations, which have constricted budgets. To balance the budgets, the things that get cut are salaries and benefits. In the private sector, there’s often a similar story: Companies keep salaries and benefits low–or outsource work to independent contractors who don’t get any benefits at all–in order to maximize profitability and return money to shareholders.

That leaves us, Orleck says, with a broad coalition of workers, both public and private sector, whose livelihoods have suffered for the benefit of corporations. And as the teachers’ strikes–and scores of labor strikes around the world–have shown, that system has reached its breaking point…..

PolicyInsights

Source: PolicyInsights, 2018

We want to build you a simple and intuitive national platform to engage with your local governments, to understand the services provided and their outcomes. We are starting with four locations (two counties and two cities with similar demographic for comparison purpose). Here are some ways you can explore …. :
– select a location and explore the various programs
– compare the demographic to another location and their programs
– rate the programs of your local governments (if you happen to live in one of these four areas)
– this is a wiki style product, any users could update or add location/programs information (if you see something incorrect or want to add anything, you can contribute)

Locations:
Montgomery County, MD
Washington, DC
Fairfax County, VA
New York, NY

Quarterly Summary of State and Local Government Tax Revenues: 4th Quarter 2017

Source: U.S. Census Bureau, G17-QTAX4, March 20, 2018

The summary provides quarterly estimates of state and local government tax revenue at a national level, as well as detailed tax revenue data for individual states. This report produces three tables: Tables 1 and 2 include income and sales data and Table 3 provides tax collections by state.

Fourth quarter 2017 tax revenues for the four largest state and local government tax categories increased 9.5 percent to $438.8 billion, from $400.8 billion in the same quarter of 2016.

Related:
Complete data sets

Asset Growth Trend Continues in Fourth Quarter 2017: Q4

Source: Melinda Caskey, Deron Pope, and Gritiya Tanner, U.S. Census Bureau, Report Number: G17-QSPP4, March 2018

For the 100 largest public-employee pension systems in the country, assets (cash and investments) totaled $3,785.9 billion in the fourth quarter of 2017, increasing by 2.7 percent from the 2017 third quarter level of $3,684.7 billion. Compared to the same quarter in 2016, assets for these major public-pension systems increased 11.6 percent from $3,392.1 billion. The main driver of this gain is earnings on investments, which totaled $142.2 billion during the fourth quarter of 2017. Earnings on investments make up for the deficit between contributions and benefits paid out, and are a critical contributor to the sustainability of pension plans (see Figure 1). The summary highlights the major asset categories (equities, debt instruments, and cash equivalents) and does not reflect all of the categories published for the Quarterly Survey of Public Pensions.
Related:
Complete data sets

Economic Development Tax Incentives Evaluation Act: Evaluation of “Motion Picture Production Tax Credits” – Tax Years 2013 through 2015

Source: State of Rhode Island, Office of Revenue Analysis, March 16, 2018

Part I: Introduction

Pursuant to Rhode Island General Laws § 44-48.2-4, titled Rhode Island Economic Development Tax Incentives Evaluation Act of 2013, the Chief of the Office of Revenue Analysis (ORA) is required to produce, in consultation with the Director of the Economic Development Corporation, the Director of the Office of Management and Budget, and the Director of the Department of Labor and Training, a report that contains analyses of economic development tax incentives as listed in R.I. Gen. Laws § 44-48.2-3(1). According to R.I. Gen. Laws § 44-48.2-4(1), the report “[s]hall be completed at least once between July 1, 2014, and June 30, 2017, and no less than once every three (3) years thereafter”. ….

Part II: Benchmarking Motion Picture Activity in Rhode Island, Selected Comparison States, and Nationwide

An understanding of current and historical motion picture production activity in Rhode Island as well as in comparison states and the nation provides context to the economic environment in which the MPPTC program operates. First, the benchmarking analysis contained within this part presents information on the availability of tax benefits targeting the motion picture industry in Rhode Island and in comparison states. Next, this part presents data highlighting current levels and long-term trends in motion picture production activity and employment and evaluate Rhode Island’s relative performance and on key economic indices.

ORA focused its investigation of motion picture activity, employment, and availability of tax incentives targeting motion picture production in four comparison states. The selected states are two neighbors, Massachusetts and Connecticut, in addition to two national leaders in motion picture production, New York and California. Additionally, this report includes selected comparisons to national data to allow the reader to consider the state-level data in the context of national levels, trends, and cycles. ….

Part III: Report Data Description

Part IV: Evaluation of the Economic Impact of the Tax Credit

Part V: Discussion and Recommendations

ORA Recommendations
Finding #1: The statutory goals of the MPPTC are poorly defined and performance measured against statutory objectives is relatively poor. ….
Finding #2: Current data reporting requirements lead to inconsistent and unreliable data on program performance. ….
Finding #3: MPPTC program fails to breakeven; program has negative return on investment. ….
Finding #4: Credit usage is low relative to the annual aggregate cap of $15.0 million, suggesting that the program is out-of-touch with the motion picture industry, and making revenue impacts difficult to predict. ….
Finding #5: MPPTC does contain a sunset provision, representing a best practice of tax incentive design. ….

Related:
Study: RI taxpayers lost $1.8 million a year on film tax credits
Source: Ted Nesi and Steve Nielsen, WPRI, April 16, 2018

State Study Finds RI Film/TV Incentives Generate Only 27 Cents For Every Dollar Spent
Source: Ian Donnis, Rhode Island Public Radio, April 18, 2018

A Macro Analysis of the Return on Investment of the Rhode Island Motion Picture Production Tax Credits
Source: State of Rhode Island, Office of Revenue Analysis, Discussion Paper, July 24, 2008

State Payroll Taxes: A Tool for States to Circumvent the Republican Tax Plan

Source: Dean Baker, Center for Economic and Policy Research (CEPR), February 2018

From the abstract:
The new tax law sharply limits the deduction for state and local taxes (SALT) when calculating federal taxes by capping the deduction at $10,000. While this will not affect most taxpayers, it will affect a substantial number of taxpayers in relatively high tax states like California and New York. This paper suggests an employer-side payroll tax as a tool that states can use to shield most of the tax revenue that otherwise would have been collected through formerly deductible income or sales taxes.

Infrastructure Reality Check

Source: Sarah Crane, Regional Financial Review, Volume 28 Number 7, March 2018
(subscription required)

This article assesses the magnitude of needed U.S. infrastructure spending and compares it to current proposals. Further, it assesses the multiplier effect of such spending and finds that it is stronger during a recession and the immediate recovery period when there is considerable idle resources in the economy.

GO Methodology scorecard inputs updated for 2018

Source: Lauren Von Bargen, Heather Guss, Katie Townsend, Alexandra S. Parker, Leonard Jones, Naomi Richman, Moody’s, Sector In-Depth, April 10, 2018
(subscription required)

We have updated the institutional framework scores and the standardized adjustments that we use in the scorecard for our US local government general obligation (GO) methodology. In this publication, we provide the complete list of institutional framework scores for all major sectors with rated local government GO credits, as well as standardized scorecard adjustments we make for issuers in certain states and sectors to reflect factors not fully captured in the institutional framework scores. We use the scorecard as a tool in the assignment of ratings to GO debt. Adjusted scores generated by the scorecard are not necessarily reflective of assigned ratings, which we determine through a rating committee process.