Category Archives: State & Local Finance

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.

Make Your Own Tables Of State Taxes And Expenditures With Our State And Local Finance Data Query System (SLF-DQS)

Source: Brookings Institution and the Urban Institute, Tax Policy Center

The State & Local Finance Data Query System (SLF-DQS) allows flexible presentation of data from the Census of Governments State and Local Finance series. That series contains detailed revenue, expenditure and debt variables for the United States, each of the 50 states, and the District of Columbia for 1977-2004. The data are available by type of government: state, local, state and local totals, and local government detail. All data presented are state aggregates of finance data for the selected level of government. Users can view the data along different dimensions, in real or nominal dollars, and on a per capita or fraction of personal income, general revenues or total expenditures basis. This tool is useful for comparative, single state, or time series analysis.

Who Pays for the Water Pipes, Pumps and Treatment Works? – Local Government Expenditures on Sewer and Water – 1991 to 2005

Source: Rich Anderson, Mayors Water Conference, 2007

Local government spent $82 billion to provide sewer and water services and infrastructure in FY2005, up from $45 billion in FY1992. The local government share of spending on sewer is just over 95 percent, and the state share is just under 5 percent. The local government share of spending on water supply is over 99 percent. Total spending on sewer and water from 1991-1992 to 2004-2005 is $841 billion.

The trend is for greater spending levels. Factors contributing to the increased need for investment include: population growth and land use development; an aging water infrastructure that needs constant maintenance and rehabilitation; and climate change impacts that threaten water supplies from drought; reduced snow-pack; salt water intrusion on coastal aquifers from rising sea levels; increased storms, hurricanes and flooding that require infrastructure hardening.

Local government is the primary investor in public-purpose sewer and water. Costs and spending will increase dramatically over time, and the added costs from climate change impacts are not currently included in infrastructure financing discussions. The nation’s cities need more help from the federal government and greater access to private equity to address investment needs over the next 50 years.

City Fiscal Conditions in 2007

Source: Michael A. Pagano and Christopher W. Hoene, National League of Cities, Research Brief 2007-2, October 2007

City finance officers report that the fiscal condition of the nation’s cities improved in the past year. However, as they prepare to close the books on 2007, finance officers are less optimistic, predicting a slowdown in revenues and increased spending pressures.

Related article:

Housing Downturn Takes Toll on Cities’ Revenue

Source: Monica Davey, New York Times, October 18, 2007