More Budget Belt-Tightening Means More Job Losses for States

This paper looks at the problem of state budget shortfalls during the recession and calculates the number of jobs that would be lost (nationally and by state) if states utilize pro-cyclical spending cuts in an attempt to balance their budgets. This is an update to an earlier paper from December 2008, "Will Workers Survive State Budget Belt-Tightening?"economic stimulus, fiscal stimulus, recession, ARRA, unemployment

The Impact of Public Pensions on State and Local Budgets

State and local pensions have been headline news since the financial collapse reduced the value of their assets, leaving a substantial unfunded liability. The magnitude of that liability depends on the interest rate used to discount future benefit promises but, regardless of the assumptions, states and localities are going to have to come up with more money. This brief looks at the size of the additional funding relative to state budgets. The brief proceeds as follows. The first section provides an overview of state and local plans and in­troduces our sample of six states: California, Florida, Georgia, Illinois, Massachusetts, and New Jersey. The second section presents data on pension expendi­tures relative to budget totals for states and localities in the aggregate and for our sample of plans. The third section develops baseline budgets for the period 2010-2043 for all states and localities and for the six individual states. It then projects annual required pension contributions beginning in 2014 under three scenarios: 1) amortizing the unfunded liability valued at an 8-percent discount rate over the next 30 years; 2) amortizing the unfunded liability valued at 5 per­cent over the next 30 years; and 3) continuing to pay contributions at current levels until the trust fund is exhausted and then paying benefits on a pay-as-you-go basis. The final section concludes that whereas public plans are substantially underfunded, in the aggregate they currently account for only 3.8 percent of state and local spending. Assuming 30-year amortization beginning in 2014, this share would rise to only 5.0 percent and, even assuming a 5-percent discount rate, to only 9.1 percent. Aggregate data, however, hide substantial variation. States that have seriously underfunded plans and/or generous benefits, such as California, Illinois, and New Jersey, would see contributions rise to about 8 percent of budgets with an 8-percent discount rate and 12.5 percent with a 5-percent discount rate.State and Local Pensions

States Face Fiscal Crunch after 1990s Spending Surge

Across the nation, large budget gaps are forcing state governments to make tough policy choices. While some states are trying to control spending, others are turning to tax increases to balance their budgets. Some state officials are trying to pass the buck for their poor fiscal management by pleading for a bailout from Washington. But a bailout would encourage states to continue overspending, which is the source of the current fiscal mess. The states' mistake was to allow rapid tax revenue growth during the 1990s to fuel an unsustainable expansion in spending. Between fiscal years 1990 and 2001, state tax revenue grew 86 percent--more than the 55 percent of inflation plus population growth. If states had limited spending growth to that benchmark, budgets would have been $93 billion smaller by FY01--representing savings roughly twice the size of today's state budget gaps. If revenue growth higher than the benchmark had been given back to taxpayers in permanent tax cuts and annual rebates, rebates could have been temporarily suspended during FY02 and FY03 to provide a cushion with which to balance state budgets. Current budget gaps provide policymakers an opportunity to weed out the budget excesses built up during the past decade. Yet overall state spending continues to grow. After soaring 8.0 percent in FY01, state general fund spending has not been cut in FY02 or FY03 even as large budget gaps have appeared. States should impose tax and spending growth caps to prevent budgets from growing too quickly during the next boom. Revenue growth above a benchmark would be given back in tax cuts and tax rebates. That would prevent spending from increasing too quickly and provide the option of suspending rebates during slowdowns to close budget gaps without the damage caused by tax rate increases

Welfare reform and state budgets

Welfare ; State finance ; Personal Responsibility and Work Opportunity Reconciliation Act of 1996

State budgets under stress: paths to sustainability

State governments have been noticeably absent in contributing to U.S. economic growth since the recession of 2008–09. Despite some recovery in tax revenues, many states are still reporting budget shortfalls and spending pressures for pensions and health care.Budget - United States ; Fiscal policy - United States

Votes Count: Legislative Action on Pre-K Fiscal Year 2010

Examines changes in state legislatures' budgets for pre-kindergarten programs and highlights trends in high-quality pre-K policy making and funding strategies in the face of budget shortfalls. Includes state-by-state budget and policy summaries

Late Budgets

The budget forms the legal basis of government spending. If a budget is not in place at the beginning of the fiscal year, planning as well as current spending are jeopardized and government shutdown may result. This paper develops a continuous-time war-of-attrition model of budgeting in a presidential style-democracy to explain the duration of budget negotiations. We build our model around budget baselines as reference points for loss averse negotiators. We derive three testable hypotheses: there are more late budgets, and they are more late, when fiscal circumstances change; when such changes are negative rather than positive; and when there is divided government. We test the hypotheses of the model using a unique data set of late budgets for US state governments, based on dates of budget approval collected from news reports and a survey of state budget o¢ cers for the period 1988-2007. For this period, we find 23 % of budgets to be late. The results provide strong support for the hypotheses of the model.government budgeting; state government; presidential democracies; political economy; late budgets; fiscal stalemate; war of attrition

Counting Is Not Enough: Investing in Qualitative Case Reviews for Practice Improvement in Child Welfare

Outlines the value of quality case service reviews in child welfare systems, requirements for building and sustaining a robust process and adapting it under limited state budgets, and recommendations for jurisdictions, initiators, and national leadership

OPTIMIZING LOCAL BUDGET BALANCING IN ROMANIA

The importance of the local public finance is growing in accordance with the increasing proportion of the decentralization process. The mechanism of resource allocation, and especially the allocation criteria used, constitutes subjects of debate. Our objective pursued is to assess whether the avoidance of the first step for balancing the allocation of funds can provide enhanced fairness in balancing the local budgets across the country. Local budgets in Romania receive significant resources from the state budget in the form of amounts and quotas distributed from certain taxes, which are revenues for the state budget. Some of these amounts are designed to balance the local budgets. The distribution of funds from the state budget to the local budgets requires two steps. Firstly, the amounts are divided by county, secondly, these amounts are directed within the county especially towards localities which have a lower financial standing. Given the significant disparities between counties, we believe that this mechanism does not ensure fairness in the allocation because the funds distributed according to the first step may not use fair criteria to meet the requirements for balanced local budgets. Therefore, we intend to simulate a balanced allocation of national funds for eliminating the first step that produces the most significant inequities. Direct application of the second step of allocation, with its two phases, will provide more funds serving those local administrative units for the income tax per capita is lower than the national average. Comparing the values allocated for the year 2011 with those obtained in the simulation we will examine changes that occur after the application of this method which seems to be more equitable and appropriate. This work was supported by CNCSIS-UEFISCSU, project number PNII-IDEI 1780/2008local budget, budgetary resources, budget balancing, resource repartition

Headed for a Crunch: An Update on Medicaid Spending, Coverage and Policy Heading Into an Economic Downturn

Presents findings from a survey of state Medicaid officials on trends in spending, enrollment, policy actions, and budgets for fiscal years 2008-2009. Discusses the possibility of increased enrollment and budget shortfalls due to the economic slowdown