This New Climate Economy Working Paper was written as a supporting document for the 2015 report of the Global Commission on the Economy and Climate, Seizing the Global Opportunity: Partnerships for Better Growth and a Better Climate. It reflects the research conducted for Section 2.1 of the full report and is part of a series of 10 Working Papers. It reflects the recommendations made by the Global Commission. The 2015 report was directed by Michael Jacobs and managed by Ipek Gencu.
From the press release:
New research from the New Climate Economy finds that investing in public and low emission transport, building efficiency, and waste management in cities could generate savings with a current value of US$17 trillion by 2050. These low-carbon investments could also reduce greenhouse gas emissions by 3.7 Gt CO2e per year by 2030, more than the current annual emissions of India. With complementary national policies such as support for low-carbon innovation, reduced fossil fuel subsidies, and carbon pricing, the savings could be as high as US$22 trillion….Creative policy instruments and innovative financing can help cities overcome barriers to action, the report says. For every US$1 invested in improving the creditworthiness of cities, more than US$100 can be leveraged through private finance for low-carbon urban infrastructure. And every US$1 million invested in project preparation could yield US$20–50 million in capital support for successful projects.
The report offers numerous examples of cities that have achieved or can achieve economic benefits from green investments.
• Bus Rapid Transit: The economic returns of Johannesburg’s Bus Rapid Transit system in its first phase were close to US$900 million.
• Building efficiency: Singapore’s “Green Mark” program, for instance, which aims to cover 80% of its buildings by 2030, could see a reduction in building electricity use of 22% and net economic savings of over US$400 million.
• Cycling: Copenhagen’s planned Cycle Super Highways are estimated to have an internal rate of return on investment of 19% per year….
From the abstract:
Changing demographics, technology, and inflation are creating an increasingly difficult environment for state budgets. An aging population puts more pressure on spending programs while reducing tax revenues from some sources. State sales tax revenue systems have not kept up as technology has changed the marketplace. Costs of government programs keep rising, particularly health care, while inflation erodes excise tax revenue. States must face these emerging pressures as they continue to recover from the Great Recession. To keep a functioning government, legislators will need to make difficult tradeoffs between revenue increases and spending cuts. This brief examines the history and outlook of state revenues and expenditures with particular attention to the effects of the last recession on state fiscal policy.
From the executive summary:
Medicaid is the nation’s primary health insurance program for low-income and high-need Americans. Because of the program’s joint federal-state financing structure, Medicaid has a unique role in state budgets because it is both an expenditure item and a source of federal revenue for states. States have significant flexibility within broad federal rules to administer their Medicaid programs. Policy decisions, as well as other factors such as the economy, demographics and state tax capacity are key factors in determining the types and amounts of revenue that states collect as well as how they budget those funds across programs.
Under the Affordable Care Act (ACA), Medicaid was expanded to nearly all adults with incomes at or below 138 percent FPL. However, the June 2012 Supreme Court decision effectively made the Medicaid expansion optional for states. As of September 1, 2015, 31 states including DC have adopted the Medicaid expansion.1 (Exhibit 1.1) For those that expand, the federal government pays 100 percent of the Medicaid costs for those newly eligible from January 2014 through December 2016. The federal share then phases down gradually to 90 percent in 2020 and remains at that level thereafter, well above traditional rates. The effects of the Medicaid expansion on state budgets and economies have been key issues for policy makers.
This brief, prepared with the Rockefeller Institute of Government, the public policy research arm of the State University of New York, is designed to provide some insight into the underlying economic and fiscal conditions in expansion and non-expansion states leading up to 2014. Analysis focuses on the typical (i.e. median) state for each group. This analysis will provide a framework against which to measure the impact of expansion decisions going forward. The sections focus on: demographics, tax capacity and revenue, state budgets and employment. Key findings include:
• The typical expansion state was in a better position across the factors analyzed leading up to the ACA Medicaid expansion in 2014.
• Median poverty and uninsured rates were higher in non-expansion states. (Exhibit 1.3)
• Across different measures, the median tax capacity for expansion states has been higher. (Exhibit 1.4)
• Median tax collections per capita have historically been higher in expansion states. (Exhibit 1.5)
• The typical expansion state has historically raised more tax revenue as a share of available resources; the gap between these two groups has increased over time. (Exhibit 1.6)
• The typical expansion state spent more per capita on Medicaid and K-12 education prior to the major ACA coverage expansions. (Exhibit 1.7)
• Health-related employment remained strong during the recession for both groups of states; the typical expansion state has historically had a higher share of employment coming from the health sector. (Exhibit 1.8)
• Key Findings
• List of Exhibits
From the abstract:
We use Bayesian prior and posterior analysis of a monetary DSGE model, extended to include fiscal details and two distinct monetary-fiscal policy regimes, to quantify government spending multipliers in U.S. data. The combination of model specification, observable data, and relatively diffuse priors for some parameters lands posterior estimates in regions of the parameter space that yield fresh perspectives on the transmission mechanisms that underlie government spending multipliers. Posterior mean estimates of short-run output multipliers are comparable across regimes — about 1.4 on impact — but much larger after 10 years under passive money/active fiscal than under active money/passive fiscal — means of 1.9 versus 0.7 in present value.
From the press release:
An independent report released today finds that overall four-year public universities have expended more resources educating students despite absorbing overall funding losses due to state budget cuts not fully offset by tuition and fee revenue. During the six year period of 2006-07 to 2012-13, after adjusting for inflation, four-year public universities experienced state funding cuts of $2,370 per student, while tuition and fee revenues increased by only $1,940 – a net loss of $430 per full-time student. Over that same period of time, four-year public universities increased educational and related expenditures by $528 per full time student.
On September 10, 2015, National Association of Counties (NACo) and the Western Interstate Region host a briefing on Capitol Hill to describe the importance of the Payments in Lieu of Taxes (PILT) program, urging members of Congress to approve immediate (FY16) and long-term funding for the Payments in Lieu of Taxes program, or PILT. ….
Sixty-two percent of counties have federal lands within our boundaries. Despite not being able to collect property tax on federal lands, county governments must still provide important services for their residents and visitors to public lands, including solid waste disposal, law enforcement, road and bridge upkeep and emergency medical services. Counties provide significant support for national parks and forests, wildlife refuges, recreation areas and other land that covers roughly 640 million acres, or nearly 28 percent of the U.S.
This year, the PILT program provided $442 million to approximately 1,900 counties and other local governments to offset forgone tax revenues due to the presence of substantial acreage of federal land in our jurisdictions. The authorization for PILT is set to expire Sept. 30, 2015…..
Select any state to see how much federal and state money is going to working families for public assistance programs in that state. Federal costs are comprised of expenditures on Medicaid/CHIP, the cash assistance portion of Temporary Assistance for Needy Families (TANF), the Earned Income Tax Credit (EITC), and Food Stamps (SNAP). State costs are comprised of expenditures on Medicaid/CHIP and the cash assistance portion of TANF. All figures represent yearly expenditures using data from 2009-2011, adjusted to 2013 dollars. For more information see the report The High Public Cost of Low Wages.
Flagler County, Fla. commissioners have approved a plan to import prescription drugs through a Canadian broker that officials say could save employees 50 percent to 80 percent on some medications. The company, CanaRx, will supply brand-name maintenance medications — such as those for high blood pressure or to lower cholesterol. Participation in the program will be voluntary, according to Joe Mayer, the county’s director of community services. And the county will continue to offer an other prescription benefit through its onsite employee health clinic or retail pharmacies for generics…. Schenectady County, N.Y. has had a similar program since 2004, County Attorney Chris Gardner said. As a result, the county is spending less on prescription drugs than in 2003. Back then, he said, prescription costs were poised to overtake medical costs…..