Category Archives: State & Local Finance

GSA authorized to help state and local governments purchase equipment

Source: American City and County Local Government Update, Vol. 8 No. 29, July 7, 2008

The U.S. General Services Administration (GSA) has been authorized to help state and local governments purchase homeland security equipment, such as alarm systems, facility management systems, and law enforcement and fire fighting equipment. Under the Local Preparedness Acquisitions Act, signed by President Bush on June 25, the GSA may now allow state, local and tribal governments to participate in its cooperative purchasing program to buy the equipment at discounted rates.

Report explores funding for state retiree health care benefits

Source: American City and County Local Government Update, Vol. 8 No. 29, July 7, 2008

A new report from the Washington-based Center for State and Local Government Excellence explores some of the ways states are moving from a pay-as-you-go approach to funding future retiree health care benefits to one that addresses unfunded liabilities and rising health care costs. The center prepared the report, “Balancing Dollars and Health Sense: A Framework for Decision Making on Funding State Retiree Health Care Benefits,” in response to a request from the Michigan House of Representatives for research on retiree healthcare funding options in light of the state’s $22.7 billion in unfunded retiree health care obligations.

State and Local Government Pension Plans: Current Structure and Funded Status

Source: Barbara D. Bovbjerg, Government Accountability Office, GAO Report GAO-08-983T, July 10, 2008

From the abstract:
Millions of state and local government employees are promised pension benefits when they retire. Although these benefits are not subject, for the most part, to federal laws governing private sector benefits, there is a federal interest in ensuring that all American have a secure retirement, as reflected in the special tax treatment provided for private and public pension funds. Recently, new accounting standards have called for the reporting of liabilities for future retiree health benefits. It is unclear what actions state and local governments may take once the extent of these liabilities become clear but such anticipated fiscal and economic challenges have raised questions about the unfunded liabilities for state and local retiree benefits, including pension benefits. GAO was asked to report on (1) the current structure of state and local government pension plans and how pension benefits are protected and managed, and (2) the current funded status of state and local government pension plans. GAO spoke to a wide range of public experts and officials from various federal and nongovernmental entities, made several site visits and gathered detailed information about state benefits, and analyzed self-reported data on the funded status of state and local pension plans from the Public Fund Survey and Public Pension Coordinating Council. …….. . Many experts consider a funded ratio (actuarial value of assets divided by actuarial accrued liabilities) of about 80 percent or better to be sound for government pensions. We found that 58 percent of 65 large pension plans were funded to that level in 2006, a decrease since 2000 when about 90 percent of plans were so funded.
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Preventing Local Government Fiscal Crises: Emerging Best Practices

Source: Charles K. Coe, Public Administration Review, Volume 68 Issue 4, July/August 2008
(subscription required)

From the abstract:
What type of oversight should states exercise over local units in order to prevent fiscal crises? This article discusses a sequence of three best practices that some states use to prevent fiscal emergencies. They first monitor local government finances to predict fiscal distress. After detecting signs of fiscal distress, states actively assist local units in ameliorating the problem. Finally, assistance notwithstanding, if a situation becomes grave, states require local units to take strong remedial measures, including increasing taxes and reducing expenditures.

$228 Million Paid to County Governments as Compensation for Lost Taxes on Federal Lands

Source: U.S. Department of the Interior, Press release, June 12, 2008

Secretary of the Interior Dirk Kempthorne announced today that local governments with tax-exempt federal land in their jurisdictions will receive $228.5 million this year in compensation for forgone tax revenue.

Under the federal Payments in Lieu of Taxes (PILT) Program, the money is distributed to about 1,850 county and other local governments around the nation to help pay for essential services, such as firefighting and emergency response and to help improve school, road and water systems.

The Department of the Interior annually collects about $4 billion in revenue from commercial activities on federal lands, such as livestock grazing, timber harvesting, and oil and natural gas leasing. Some of these revenues are shared with states and counties in the form of revenue-sharing payments. The balance is deposited in the U.S. Treasury, which in turn pays for a broad array of federal activities, including annually appropriated PILT funding to counties.

Eligibility for PILT payments is reserved for local governments (usually counties) that contain nontaxable federal lands and provide government services related to public safety, housing, social services, transportation and the environment.

By law, the payments are calculated using a mandated formula, based on the number of acres of federal entitlement land and the population within each county or jurisdiction. These lands include the National Forest and National Park Systems, National Wildlife Refuge System as well as lands managed by the Bureau of Land Management and those affected by U.S. Army Corps of Engineers and Bureau of Reclamation water resource development projects, and others.

Fiscal Survey of the States

Source: National Governors Association and the National Association of State Budget Officers, June 2008

From the press release:
Fiscal 2008 marked a turning point in state finances, with a significant increase in the number of states experiencing fiscal difficulties after several years of relative stability, 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, NGA and NASBO found that while fiscal conditions varied dramatically across states, overall expenditure growth rates declined in fiscal 2008 and the number of states experiencing revenue shortfalls increased. States expect continued expenditure pressures from a variety of sources, including health care and Medicaid, employee pensions and infrastructure. In addition, because states historically have continued to feel the impact of national economic downturns even after recovery begins, states could face even more difficult financial conditions in fiscal 2009 and beyond.

In Your Own Backyard: How NIH Funding Helps Your State’s Economy

Source: FamiliesUSA, June 2008

From the press release:
The National Institutes of Health has a legacy of great medical accomplishments, including victories over diseases like measles, rubella, and whooping cough. Now a report from a national health care advocacy organization reveals how NIH funding to states creates jobs, helps develop communities that are focused on advanced biomedical research, and sustains America’s leadership in medical research.

Titled “In Your Own Backyard,” the report from Families USA, the national organization for health care consumers, details the actual benefits of NIH research awards to all 50 states. In 2007, the NIH awarded almost $23 billion in research grants and contracts. This funding created more than 350,000 new jobs nationwide, generated more than $18 billion in wages from those new jobs, and spurred more than $50 billion in business activity in the states.

The Families USA report, however, describes a downside. Several years of flat funding of the NIH by Congress is now crippling research on global health threats, stunting economic activity, and jeopardizing U.S. preeminence in biomedical research.
See also:
State Fact Sheets
Key Findings

The Impact of Extending Marriage to Same-Sex Couples on the California Budget

Source: Brad Sears and M.V. Lee Badgett, Williams Institute, UCLA School of Law, June 2008

This analysis estimates the impact of the California Supreme Court’s recent decision to extend marriage to same-sex couples on state and local government revenues in California. Using the best data available, we estimate that allowing same-sex couples to marry will result in approximately $63.8 million in revenue for the state of California over the next three years. The weddings of same-sex couples will generate new economic activity for the state’s businesses and over the next three years, the direct spending from same-sex couples on weddings and tourism will generate over $63.8 million in revenue for state and local governments.
The Impact on Iowa’s Budget of Allowing Same-Sex Couples to Marry