Source: Stephen M. Hubbard, Public Works Management & Policy, Published online before print November 10, 2016
From the abstract:
This article examines the implementation of a novel national infrastructure bank (NIB) which coins or “makes” U.S. currency to provide capital for infrastructure loans. This approach eliminates bond expense while reducing long-term life cycle costs caused by deferred maintenance and construction inflation. It also addresses the three main issues that have blocked prior NIB proposals by providing a near zero-cost source of capital, reducing the total size of government employment, and isolating funding from national politics while reducing costs by US$75 to US$220 billion and creating up to three million or more jobs annually.
Source: Justin M. Ross, Siân Mughan, Public Finance Review, Published online before print November 11, 2016
From the abstract:
An important concern to the efficiency of public finance systems is that voters may suffer from various “fiscal illusions” that can be exploited by politicians to grow the public sector. This article contributes evidence on the specific public financial management mechanisms by associating the impact property reassessments have on the “visibility” of budget size signaled by property tax rates. Using data from Virginia cities and counties from 2001 to 2011, the results indicate mass reappraisals, which reduce property tax visibility cause contemporaneous property tax levy increases, as do reappraisals that increase future tax visibility. These revenue shocks are then smoothed into expenditures through the management of assets, indicating policy makers prefer the spending to be drawn from future cash reserves than immediate projects that might draw attention to the source of fiscal illusion.
Source: Charles W. Swenson, Economic Development Quarterly, OnlineFirst, Published online before print November 3, 2016
From the abstract:
This study examines whether state movie production incentives are effective in attracting and/or retaining movie production. The issue is of significant policy interest because of the large amounts spent by states for such subsidies. This study finds that while movie production incentives were effective in increasing the number of film production employment and establishments for a few states such as New York and California from 1998 to 2011, there was no discernable increase across all states. Much of this noneffect appears because of a “crowding out” effect due to the sheer number of states with incentives.
Source: Robert S. Kirk, William J. Mallett, Congressional Research Service, CRS Report, R44674, November 1, 2016
Almost every conversation about surface transportation finance begins with a two-part question: What are the “needs” of the national transportation system, and how does the nation pay for them? This report is aimed almost entirely at discussing the “how to pay for them” question. Since 1956, federal surface transportation programs have been funded largely by taxes on motor fuels that flow into the Highway Trust Fund (HTF). A steady increase in the revenues flowing into the HTF due to increased motor vehicle use and occasional increases in fuel tax rates accommodated growth in surface transportation spending over several decades. In 2001, though, trust fund revenues stopped growing faster than spending. In 2008 Congress began providing Treasury general fund transfers to keep the HTF solvent….
Source: Good Jobs First, 2016
…It’s official: the Governmental Accounting Standards Board (GASB) issued Statement No. 77 on August 14, 2015. That means all state and local budgets starting after December 15, 2015 and conforming to Generally Accepted Accounting Principles (GAAP) are covered.
Statement No. 77 requires GAAP-compliant public budgets to report how much revenue the government body lost to corporate tax breaks granted in the name of economic development, or “tax abatements” in GASB’s umbrella terminology.
This is historic news: for the first time ever, state and local governments—including school districts that lose revenue passively—will have to report the costs of job subsidies.
It is no exaggeration to refer to economic development reform in pre-GASB 77 and post-GASB 77 terms. The data will start being published in 2017 based on calendar 2016 and later budgets (see timeline below)….
Comptroller Stringer Releases Fiscal Year 2016 Comprehensive Annual Financial Report
Source: New York City Comptroller Stringer, Press Releases, October 31, 2016
Comptroller’s Office implements GASB 77 tax abatement disclosures one year ahead of schedule
(New York, NY) – Today, New York City Comptroller Scott M. Stringer released the City’s Comprehensive Annual Financial Report (CAFR) for Fiscal Year 2016, which includes the City’s audited financial statements for the year, outlines important economic and financial data about New York City and highlights work done by the Comptroller’s Office during the previous fiscal year.
Source: Don Boyd, Rockefeller Institute of Government Director of Fiscal Studies, presentation at the National Association of Budget Officers (NASBO) Fall Meeting on October 14, 2016
Rockefeller Institute of Government Director of Fiscal Studies Don Boyd presented a sober picture of state tax revenues in a recent presentation to the National Association of Budget Officers Fall Meeting on October 14, 2016.
In analysis lacking short term promise, Boyd highlighted the following:
• States forecast weak growth in state personal and sales tax revenue collections in fiscal 2017.
• Public revenue forecasts do not fully reflect the April-June tax revenue declines and the recent further weakening of sales tax. We expect forecasts to come down further.
• Low inflation and slow real growth suggest continued slow growth in withholding and in consumption subject to sales tax
• Stock market booms and busts often lead to surges and falls in income tax revenue that swamp growth driven by inflation and the real economy. The stock market so far this year has been tepid.
• Not an ebullient environment for revenue.
The analysis was based in large part on data collection and analysis by Institute Senior Researcher Lucy Dadayan. The presentation reviewed recent trends in state tax revenue collections and their relationship to the economy. Particularly noteworthy is the continuing slowdown in state sales tax revenue, and continued weakness in wages and income tax withholdings.
Source: Tennessee Department of Economic and Community Development (TNECD), 2016
The Tennessee Department of Economic and Community Development (TNECD) is committed to an open and transparent government. This searchable database is designed to better assist the public in accessing project data for FastTrack grants.
State releases list of business grants totaling $400 M
Mike Reicher, Tennessean, October 25, 2016
The Tennessee Department of Economic and Community Development recently released an online database detailing more than $400 million of state grants awarded to businesses.
Source: Maria O’Brien Hylton, Boston University School of Law, Public Law Research Paper No. 16-34, August 29, 2016
From the abstract:
In its recent Harris v. Quinn opinion the U.S. Supreme Court (in particular Justice Alito) seemed to welcome a future opportunity to reconsider the 1977 landmark Abood decision in which public sector closed shop employees were not required to join a union but could be subject to fees that cover the costs of “collective bargaining, contract administration, and grievance adjustment purposes.” Supporters of the Abood approach argue that it is a reasonable compromise that prevents non-members from free riding on the union’s efforts (i.e. enjoying the wages and benefits negotiated by the union without sharing the costs incurred.) Detractors and the plaintiffs in Friedrichs argue that free riding concerns are insufficient to overcome serious First Amendment objections. The central idea is that all bargaining in the public sector is inherently political. Public sector pay, tenure and benefits (especially expensive retiree health care and pension promises), it is claimed, now profoundly affect the ability of state and local governments to function in many jurisdictions. This article briefly reviews the major claim in Friedrichs — that public sector agency agreements violate the First Amendment — and considers the implications of a decision that, but for Justice Scalia’s unexpected death almost certainly would have overturned Abood. What would this mean for financially strapped state and local governments? To understand what a victory for the Friedrichs plaintiffs would mean, this paper looks at recent data from Wisconsin which dramatically constrained public sector agency agreements a few years ago and has seen public union membership, union revenue and political power plunge as a result. If Friedrichs had overturned Abood during the 2016 term, we would now expect to see national patterns similar to those observed in Wisconsin. In many places around the country a drop in public sector union political power would be expected to translate into a climate more supportive of reduced future expenditures on public pensions and health care.
Source: Christiana McFarland, Michael A. Pagano, National League of Cities, October 2016
This year’s City Fiscal Conditions survey finds that:
– General Fund revenues grew 3.73% in 2015, and are expected to grow 0.54% as cities close the books on 2016. Expenditures grew 3.57% in 2015 and are budgeted to increase 3.71% in 2016.
– Property tax revenue growth is returning to pre-recession levels, with a sizable increase of 3.77% in 2015 and anticipated growth of 2.60% in 2016.
– Sales tax revenues are continuing to post strong growth, with 5.49% in 2015 and 1.99% expected in 2016.
– Despite post-recession volatility, income tax revenues grew 5.82% in 2015 and are expected to grow 3.47% in 2016.
– Ending balances are returning to historic highs, standing at 24.48% of General Fund expenditures in 2015 and budgeted for 21.67% of expenditures in 2016.
Despite improved fiscal stability for day-to-day operations, local budgets continue to confront mounting challenges. Infrastructure and employee- and retiree-related costs, matched with inequitable recovery in some local housing and labor markets, threaten longer-term fiscal sustainability. These concerns are foremost on the minds of city leaders, some of whom are implementing pension reforms and leveraging fiscal planning tools.
These strategies are particularly important given that city revenues have not fully recovered from the Great Recession. As a result, many may be operating with suppressed revenues when and if another recession emerges in the coming years. For now, though, city fiscal conditions are showing signs of vitality, with local governments reinvesting in areas critical to growth and community quality of life including infrastructure and public safety.
Source: Jean-Pierre Aubry and Caroline V. Crawford, Center for Retirement Research at Boston College, SLP#52, October 2016
The brief’s key findings are:
– Individuals who move generally go to places with the best mix of amenities, including low tax rates and a robust economy.
– An open question is whether a state’s unfunded pension liabilities could also affect moving decisions.
– While movers generally know little about a state’s pension finances, critical news stories could signal poor fiscal management.
– The analysis finds that, in addition to traditional factors, a state’s pension funding does play a role, albeit small.