Category Archives: State & Local Finance

19 States Face Total Budget Shortfall of at Least $32 Billion in 2009; 9 Others Expect Budget Problems

Source: Elizabeth C. McNichol and Iris Lav, Center on Budget and Policy Priorities, January 28, 2008

At least twenty-five states, including several of the nation’s largest, face budget shortfalls in fiscal year 2009. Of these 25 states, 19 have already made specific estimates; the combined deficits of these 19 states are expected to total at least $32 billion for fiscal 2009 — which begins July 2008 in most states. Another 3 states expect budget problems in fiscal year 2010, although some of those gaps may occur earlier than expected. Many of the other states have not yet released information about their fiscal status.

Projections of Education Statistics to 2016

Source: National Center for Education Statistics

This edition of Projections of Education Statistics provides projections for key education statistics, including enrollment, graduates, teachers, and expenditures in elementary and secondary schools. Included are national data on enrollment and graduates for the past 15 years and projections to the year 2016, as well as state-level data on enrollment in public elementary and secondary schools and public high school graduates to the year 2016.

Direct to PDF and Other Formats

13 States Face Total Budget Shortfall of at Least $23 Billion in 2009; 11 Others Expect Budget Problems

Source: Center on Budget and Policy Priorities

According to a new report, thirteen states, including several of the nation’s largest, face a combined budget shortfall of at least $23 billion for fiscal 2009. Another 11 states expect budget problems next year or the year after. The initial reports for 2009, which runs from June 2008 to June 2009 for most states, suggest states are returning to a time of budget deficits.

Some of the fiscal problems are due to economic conditions outside states’ control. The bursting of the housing bubble has reduced state sales tax revenue collections from sales of furniture, appliances, construction materials, and the like. Property tax revenues have also been affected, and local governments will be looking to states to help address the squeeze on local and education budgets.

In many states, however, these economic problems are being magnified by endemic budget weaknesses created by past state decisions about taxes and expenditures. Some states have relied on one-time revenues (such as the sale of state assets) to balance their budgets, have enacted tax cuts — often multi-year — without accurately assessing their affordability, and have failed to address structural weaknesses in their budgets.

State Tobacco Settlement Report

Source: Campaign for Tobacco-Free Kids, American Heart Association, American Lung Association and American Cancer Society Cancer Action Network

Since the November 1998 multi-state tobacco settlement, we have issued regular reports assessing whether the states are keeping their promise to use a significant portion of their settlement funds – expected to total $246 billion over the first 25 years–to attack the enormous public health problem posed by tobacco use in the United States.

This year, we find that the states have made important progress by increasing funding for tobacco prevention and cessation programs by 20 percent to a total of $717.2 million in fiscal year 2008, which is the highest level in six years. However, most states still fail to fund tobacco prevention programs at minimum levels recommended by the U.S. Centers for Disease Control and Prevention (CDC), and altogether, the states are providing less than half what the CDC has recommended.

Complete Report (PDF; 5.7MB)
Individual state reports and supporting materials also available.

The Impact of Unauthorized Immigrants on the Budgets of State and Local Governments

Source: Congressional Budget Office

In preparing its analysis, the Congressional Budget Office (CBO) reviewed 29 reports published over the past 15 years that attempted to evaluate the impact of unauthorized immigrants on the budgets of state and local governments. (See the bibliography for a complete list of those reports.) CBO did not assess the data underlying those estimates or the validity of the models used to prepare them. The estimates — whether from formal studies, analyses of data on particular topics, or less-formal inquiry — show considerable consensus regarding the overall impact of unauthorized immigrants on state and local budgets. However, the scope and analytical methods of the studies vary, and the reports do not provide detailed or consistent enough data to allow for a reliable assessment of the aggregate national effect of unauthorized immigrants on state and local budgets…. After reviewing the estimates, CBO drew the following conclusions:
+ State and local governments incur costs for providing services to unauthorized immigrants and have limited options for avoiding or minimizing those costs.
+ The amount that state and local governments spend on services for unauthorized immigrants represents a small percentage of the total amount spent by those governments to provide such services to residents in their jurisdictions.
+ The tax revenues that unauthorized immigrants generate for state and local governments do not offset the total cost of services provided to those immigrants.
+ Federal aid programs offer resources to state and local governments that provide services to unauthorized immigrants, but those funds do not fully cover the costs incurred by those governments.

Full report (PDF; 318 KB)

States Beginning to Experience Tighter Fiscal Conditions According to Latest Report

Source: National Governors Association/National Association of State Budget Officers

From press release:
Although states experienced stable finances in 2007, overall revenue growth has slowed and tighter fiscal conditions are expected in 2008, according to the National Governors Association (NGA) and the National Association of State Budget Officers (NASBO).

In a report released today, The Fiscal Survey of States (PDF; 649 KB), NGA and NASBO found that while most states experienced healthy revenue growth during fiscal 2007, some states already have seen significant deterioration of their fiscal conditions and expect revenue and expenditure growth to slow significantly in fiscal 2008. States expect continued expenditure pressures from a variety of sources, including increased funding demands related to health care and Medicaid and to long-term challenges such as demographic shifts, employee pensions and infrastructure. In addition, most states will feel the pinch of the nation’s weakening housing market, both directly from lower sales tax revenues and indirectly as local governments struggle with declining property values and decreasing property tax revenues.

Going after GASB

Many public finance officials worry that a series of new accounting rules will burst their budgets.
November 2007

When public finance officers met this summer in Anaheim, their association’s outgoing president kicked off the convention with an all-out assault on an accounting board. Thomas J. Glaser spent the lion’s share of his opening-day address ticking off the follies of the Government Accounting Standards Board’s recent rules and what the Government Finance Officers Association intended to do about them. GASB’s “time has come and gone,” Glaser told the 3,000 or so members in attendance, some of whom interrupted the speech with their applause.

The attack on GASB was more than a little ironic, given that when the organization came into being in 1984, the finance officers’ group played a major role in persuading the Financial Accounting Foundation, which oversees financial reporting standards for the private and nonprofit sectors, to set up a special branch for government accounting. In subsequent years — especially in the early years when it really mattered — GFOA worked to build its membership’s respect for and acceptance of GASB and the standards it set.

Today, GASB is a powerful entity. Its financial-reporting rules have the potential to bring a government’s budget to crisis. Refusal to follow its accounting precepts could lead to a downgrade in a credit rating or a shunning by the financial community.

But it is also an agency under pressure — and not just from GFOA. There is a threat to its financial-reporting hegemony: At least one state and several of its localities are set to defy a major GASB accounting rule. What’s more, the chairman of the Securities and Exchange Commission has suggested that the SEC participate in the selection of some GASB board members. Such a move could impinge on the organization’s independence and bring it, along with state and local accounting rules, closer to federal purview.

Report: Open Government Lags Far Behind Technology; States Making Limited Progress in Using the Web to Enhance the Public’s Right to Know

Source: Good Jobs First

State governments are improving their transparency practices, but many are still not taking full advantage of the Internet to inform the public. Online disclosure of corporate tax breaks and other economic development subsidies lags far behind reporting on procurement contracts and lobbying activities. These are the main findings of a report entitled The State of State Disclosure released today by the Corporate Research Project of Good Jobs First.

“The Internet makes possible an unprecedented level of government transparency and public participation.” said Good Jobs First Executive Director Greg LeRoy, “But many states have been slow to adopt vigorous online disclosure, especially with respect to economic development subsidies. Twenty-seven states and the District of Columbia still provide no systematic online subsidy disclosure.”

The Good Jobs First study evaluates the quantity and quality of state government online disclosure in three categories: economic development subsidies, state procurement contracts and lobbying activities at the state level. It rates each state’s Web sites in the three areas on criteria such as ease of searching especially for company-specific data), level of detail, scope of coverage and currency of data. Using these criteria, it assigns a score (0 to 100 percent) to the states’ performances in each of the three areas and overall, and translates the percentages into school-style letter grades (A through F).

Executive Summary (PDF; 63 KB)
Full Report (PDF; 496 KB)
State Disclosure page

President’s Budget to Cut Education Spending: New Interactive Map Shows How Much Each State Stands to Lose

Source: Center for American Progress, Press Release, October 15, 2007

The Senate continues the budget battle this week with the consideration of the Labor, Health, and Human Services Appropriations bill, which sets levels for education spending, as well as other key domestic programs. President Bush has already stated he plans to veto the bill because it provides $64.9 billion for the Education Department. Bush’s proposed budget appropriates only $61 billion–$3.9 billion less than Congress’ budget and $1.3 billion less than the Education Department received last year. The Bush administration, in the same year that it is spending $50 billion each month on operations in Iraq, plans on vetoing a bill because it increases funding for American schools by $2.6 billion, among other domestic budget increases. What’s even more surprising is that Education Secretary Margaret Spellings actually announced back in February that Bush’s newly proposed budget would increase education funding by 41 percent relative to 2001. A look at the president’s budget tells a different story. As this new interactive map shows, 44 out of 50 states would see reductions in federal funding for elementary and secondary education for fiscal year 2008 if the Bush administration got its way. Rather than bold increases, states on average will see a -1.4 percent decrease in elementary and secondary school funding.

Preventing Local Government Fiscal Crises: The North Carolina Approach

Source: Charles K. Coe, Public Budgeting & Finance, Vol. 27 no. 3, Fall 2007
(subscription required)

Some local governments face fiscal challenges due to mismanagement and declining economies. In particular, manufacturing states like Michigan and Ohio have been hard hit by the effects of international competition. To prevent fiscal distress from becoming a crisis, states exercise oversight over local government fiscal management. The three bond rating agencies consider the North Carolina oversight system a model. This paper discusses the North Carolina oversight system, including audit review, technical assistance, debt issuance, and power to take over the financial operations of distressed local units.