Category Archives: State & Local Finance

Funding for Housing, Health, and Social Services Block Grants Has Fallen Markedly Over Time

Source: Isaac Shapiro, Bryann DaSilva, David Reich, Richard Kogan, Center on Budget and Policy Priorities, Policy Futures, November 19, 2015

From the summary:
Funding for housing, health, and social services block grants has fallen significantly over time, an examination of several decades of budget data demonstrates. These data provide a cautionary tale for proposals to merge large numbers of additional programs — especially programs serving families and individuals who are low income or otherwise vulnerable — into block grants, as would occur, for example, under a proposal that House Speaker Paul Ryan made in 2014 to merge 11 low-income programs into a mega-block grant in an unspecified number of states.

Policymakers advancing these proposals often accompany them, as Mr. Ryan did, with assurances that the new block grant would get the same overall amount of funding as currently goes to the individual programs that it would replace. This new analysis of several decades of budget data strongly suggests, however, that even if the funding a new block grant received in its initial year matched the prior funding for the programs merged into the block grant, the initial level likely wouldn’t be sustained. The analysis shows that when social programs are merged into (or created as) broad block grants, funding typically contracts — often sharply — in subsequent years and decades, with the funding reductions growing deeper over time.

State Expenditure Report (Fiscal 2013-2015 Data)

Source: National Association of State Budget Officers, 2015

Highlights include:
– In fiscal 2015, total state spending increased at its fastest rate since 1992, primarily due to growth in federal Medicaid funds resulting from the Affordable Care Act (ACA).
– Spending from states’ own funds moderately grew in fiscal 2015, while federal funds to states rapidly increased due to the ACA.
– Medicaid represented over half of all federal funds to states in fiscal 2015.
– State revenue growth accelerated in fiscal 2015, although it was hampered somewhat by the decline in oil prices.

From the summary:
Total State Spending in Fiscal 2015 Increased at Its Fastest Rate Since 1992, Driven by Federal Medicaid Growth

Estimated total state spending (including general funds, other state funds, bonds, and federal funds) sharply increased in fiscal 2015. The year-over-year percentage growth rate of 7.8 percent was the highest rate since fiscal 1992. The rise in total state spending resulted from a combination of a rapid increase in federal funds to states, and modest growth in states’ own fund sources. The acceleration of federal funds to states in fiscal 2015 was almost solely due to states receiving significantly more federal Medicaid dollars as part of the first full-year of Medicaid expansion under the Affordable Care Act (ACA).

Child Welfare Financing 101

Source: National Conference of State Legislatures, October 23, 2015

The interactive graphic below offers a visual demonstration of the complicated funding streams used on child welfare services in all 50 states. The data were taken from the Federal, State and Local Spending to Address Child Abuse and Neglect in SFY 2012 report from Child Trends. Use the dropdown menu to select a state.

Final Report on Connecticut State Retirement Systems: SERS and TRS

Source: Jean-Pierre Aubry and Alicia H. Munnell, Center for Retirement Research at Boston College, November 2015

The report’s key findings are:
– Connecticut’s pension systems for state employees and teachers face large unfunded liabilities, despite recent efforts by the State to fund.
– A significant source of the problem is the “legacy debt” built up before the State began pre-funding its pensions in the 1970s.
– Since pre-funding began, inadequate contributions from the State and low investment returns have added to the problem.
– One way to address the problem is through a two-step approach:
– separately finance the legacy debt over multiple generations; and
– fund ongoing benefits using a level-dollar amortization method over a reasonable rolling period; and reduce the long-term assumed return.

Another Strong Tax Quarter for the States, But Less Promising Forecasts for Fiscal 2016

Source: Lucy Dadayan and Donald J. Boyd, Nelson A. Rockefeller Institute of Government, State Revenue Report, no. 101, November 2015

State tax revenues grew by 6.8 percent in the second quarter of 2015, the final quarter of the fiscal year for 46 states, according to the most recent State Revenue Report of the Rockefeller Institute. Personal income tax growth was robust at 14.2 percent, which was driven by strong payments with final returns up 20.0 percent and estimated taxes up 18.2 percent. This trend is not expected to continue, as this year’s revenue figures were bolstered by the strong stock market of 2014. States expect fiscal year 2016 to be weaker than 2015, largely because of an anticipated slowdown in income tax revenue.
Press release

State of State Business Incentives 2015

Source: Council for Community and Economic Research (C2ER), 2015

From the blog post:
C2ER recently completed its annual update of the State Business Incentives Database. As part of the database review process, C2ER researched every U.S. state and territory to ascertain information on what programs have been created, repealed or altered during each state’s most recent legislative sessions. Based on this research, combined with extensive outreach to representatives in every state and territory, the Database now reflects the present status of the more than 1,900 state business incentives in operation around the country.

The State of State Business Incentives 2015 report summarizes the findings from this review. Most striking is the overall growth in the number of state business incentive programs. Since the new millennium, the overall number of state incentive programs targeted to businesses has more than doubled, from less than one thousand in 1999 to nearly two thousand today. The report takes a closer look at the different types and purposes of business incentive programs administered by states and how state incentive portfolios have changed over the past few years in response to recent economic trends, with notable examples of recent state incentive activity.

A Continuing Look at Boston’s Revised Payment in Lieu of Taxes (PILOT) Program: Update Version 2.0

Source: Eric A. Lustig, Boston Research Paper No. 15-07, April 21, 2015

From the abstract:
This article examines the first three years of results under the revised Boston Payment-in-Lieu of Taxes (PILOT) Program. The article updates two previous articles on the proposals and roll-out of the program. The revised Boston program and these results continue to be significant for several reasons. First, the Boston program is a long-standing one which is acknowledged as a national leader. Second, the creation of the task force and its resulting recommendations reflected a collaborative and transparent process. Finally, PILOT programs, particularly in the northeast, are an increasingly popular and controversial revenue producing source for local governments. The article concludes that the revised Boston program has led to a broader base of contributions from the Boston nonprofit community. The overall effectiveness of the changes may be limited by the voluntary basis of the program and the non-monolithic nature of the Boston nonprofit community.

$1 Billion Question: Do the Tax Dedications in New Orleans Make Sense?

Source: Paul Rioux, Bureau of Governmental Research, November 2015

From the abstract:
In The $1 Billion Question: Do the Tax Dedications in New Orleans Make Sense? BGR presents a comprehensive picture of where local tax dollars are going in Orleans Parish. The report provides breakdowns of tax dedications by entity and by purpose, and gives examples of problems that can arise when tax dedications are established with little planning and accountability. It also makes recommendations to help ensure existing tax revenues are deployed optimally.
Read the press release
Read a one-page overview

D.C. Libraries to Host Weddings and Private Events

Source: Andrew Giambrone, Washington City Paper, November 10, 2015

If you’ve ever fantasized about getting married surrounded by books, you’re in luck: The D.C. Public Library has published regulations allowing it to host events like weddings and nonprofit galas across its 26 locations as a way to generate revenue.

Though the D.C. Council passed the bill governing this new approach in June, DCPL has only recently begun to advertise the program and structure specific revenue-generating activities around it. Among them is a new passport office opening next week at the Martin Luther King Jr. Memorial Library at 901 G St. NW. The office, in collaboration with the U.S. State Department, will process passports for fees expected to produce around $200,000 a year, and will even operate on Saturdays, Jonathan Butler, DCPL’S chief business officer, says. Essentially, the broadly written regulations permit DCPL to rent out its space for different activities, including something like a cafe in the MLK library; the activities are only defined as those that “benefit the public [and] not need relate to library services.”