Category Archives: State & Local Finance

Between A Budget And A Hard Place: The Risks Of Deferring Maintenance For U.S. Infrastructure

Source: Anne Selting, S&P Global Ratings, May 15, 2018
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State and local governments are deferring maintenance on critical infrastructure assets they own and operate. Due to a lack of standardized reporting, it’s difficult to quantify the extent of the maintenance backlog, but it could be significant. ….

Accounting, Politics, and Public Pensions

Source: Steven W. Thornburg and Kirsten M. Rosacker, CPA Journal, April 2018

Defined benefit pension plans offer politicians a convenient way to satisfy public employee demands while providing the means to defer budgeted cash payments and hide the accumulation of public debt from taxpayers. The authors describe how this plays out in practice and how accounting standards facilitate such activity. The accounting profession, and Governmental Accounting Standards Board (GASB) in particular, could do more to inform taxpayers about the state of public finances. The longstanding failure to do so, the authors argue, allows public debt to accumulate until a crisis is reached.

Behind the teacher strikes that have roiled five states – Why non-union states have seen the most unrest

Source: The Economist, May 5, 2018

From a block away, the striking teachers camped out around Arizona’s capitol at first looked like a solid sea of red, the colour of their T-shirts and tents. On closer inspection, they distinguished themselves the way the teachers have always distinguished their classrooms—with handmade signs. Leah Falcon (“Arizona exports: Cotton, copper, teachers”), who teaches middle-school maths, said she was “fighting because my kids deserve better than 34 students in a class.” Megan Marohn (“Arizona Spending per Student: $9,000. Per Inmate: $24,000”) is a classroom aide and lifelong Republican who frets that Arizona’s Republican legislature and governor “put the value of corporations above students”. Jay Bertelsen (“Christian Non-Union Conservative Teacher Fighting for Funding”) has taught computer science outside Tucson for 25 years; his children qualify for Arizona’s state-subsidised health care for poor families.

Grievances such as these have motivated teacher strikes in five states. They look likely to continue—galvanising public-sector workers in states where Democrats hope to make gains in this autumn’s midterm elections. ….

States waste hundreds of thousands on drug testing for welfare, but have little to show for it

Source: Amanda Michelle Gomez, Josh Israel, ThinkProgress, May 7, 2018

We got the questionnaires used to screen people for tests, and they are deeply flawed. …. In 2017, states spent more than $490,000 to drug-test 2,541 people who had applied for Temporary Assistance for Needy Families (TANF) benefits, which yielded just 301 positive tests. ….

The Real Reason Behind Recent Teacher Strikes — And Why They’re Likely to Continue

Source: Katherine Barrett & Richard Greene, Governing, May 10, 2018

It’s about much more than low salaries.

…. In 26 states, average teacher salaries, adjusted for inflation, were less in 2016 than they were at the end of the 20th century, according to the National Center for Education Statistics. Two years ago, an Economic Policy Institute (EPI) report documented the dive in weekly wages for teachers compared to other workers with comparable education requirements. In 2015, an average teacher made 17 percent less than comparable workers in salary. Back in 1994, the salary gap was 1.8 percent. ….

…. Teachers in Oklahoma still worry about the dangers to student education of going to a four-day school week in some districts. In Kentucky, there’s been no money for teacher professional development, extended school services have been cut and schools haven’t been able to spend money on textbooks.
Arizona school districts will still struggle to fund all the needs that have piled up. Years of cuts have, for example, left the school transportation budget severely underfunded. ….

Related:
Where Teacher Salaries Most Lag Behind Private Sector
Source: Mike Maciag, Governing, April 30, 2018

States where teachers are protesting have among the largest pay discrepancies when compared with similarly educated private-sector workers.

Wind farms bring windfalls to local governments across US

Source: Francis A Mamo, Swami Venkataraman, Lesley Ritter, Mark McIntire, Rachel Cortez, Leonard Jones, Alexandra S. Parker, Moody’s, Sector In-Depth, May 8, 2018
(subscription required)

The proliferation of wind farms in the US has propelled tax base growth and generated new tax revenue for local governments, particularly in rural areas with abundant wind resources.

For governments and corporates, marijuana brings possible gains and pressures

Source: Kenneth Kurtz, Grayson Nichols, Michael Yake, Linda Montag, Michael Levesque, Kevin Cassidy, Inga Smolyar, Peter H. Abdill, Alejandro Olivo, Moody’s, Sector In-Depth, May 8, 2018
(subscription required)

Ongoing legalization in some US states and likely legalization in Canada nationwide would be slightly beneficial for local government revenues, while alcoholic beverage, tobacco, consumer products and pharmaceutical companies would likely gain if they innovatively expand into the market.

Improving Economic Development Incentives

Source: Timothy Bartik, W.E. Upjohn Institute, 2018

From the Pew Charitable Trusts’ summary:
State and local governments commonly use economic development incentives such as tax credits and exemptions to try to boost their economies by encouraging businesses to relocate or expand within their borders. But such incentives can represent major budget commitments, costing these governments tens of billions of dollars every year. To make the best decisions about which policies to pursue, policymakers need reliable, high-quality tools and methods for evaluating their incentives and ensuring that they yield the intended results.

New research by Timothy J. Bartik of the W.E. Upjohn Institute for Employment Research offers practical guidance. In a recently released report, “Improving Economic Development Incentives,” the institute’s senior economist examines how policy design choices influence the economic impact of incentives and draws some conclusions to help state and local leaders assess and improve their policies.

Ohio State University – salary information

Source: Ohio State University, Office of Human Resources, 2018

From the press release:
The Ohio State University is breaking new ground for transparency among public universities in Ohio by making all non-student employee salaries available to the public in an online, searchable web-based application. ….

…. In calendar year 2017, 42,670 faculty and staff received $2.5 billion in total earnings – representing a one-year employee headcount increase of 1,855 (4.5 percent) and a 6.4 percent increase over the 2016 $2.35 billion payroll budget. The 2017 median annual base salary stood at $48,173, compared to $47,661 in 2016 – a 1.1 percent increase.

Two types of data are available on the Human Resources website: Users may enter a name, department, title or salary range to search for base salary information in the web-based application. A second option is available to download Excel spreadsheets of total employee earnings for calendar year 2017, which includes bonuses, overtime, deferred compensation, and vacation and sick leave payouts in addition to base salary. The data will be updated throughout the calendar year…..