Davis v. Department of Revenue of Kentucky: A Preliminary Impact Assessment

States with income taxes frequently exempt municipal bond interest from state taxation. Such exemptions, referred to as double exempts, are tax expenditures that reduce state revenues, but are viewed as a subsidy to the cost of capital for the state and its localities. All but a few states provide the income tax exemption for state based issues while taxing interest from municipal bonds issued by muni issuers in other states. A recent court case, Davis vs. Department of Revenue of Kentucky, declared state statutes limiting the state income tax exemptions to ”in-state” issues unconstitutional. This paper provides some legal background and context for the current case and addresses two key fiscal implications of this case. First, the paper presents a basic model that suggests that bonds issued by states with higher marginal tax rates would see the yields increase on their obligations while states with lower than average marginal tax rates would see their yields decline. The yields would converge at new market equilibrium due to the elimination of tax preferences across the states. Second, the preliminary estimates suggest a good deal of variance in how much tax revenue each state will lose if the case is upheld by the Supreme Court.

Making the Case for Using Financial Indicators in Local Public Health Agencies

The strength of the public health infrastructure determines the ability of local public health agencies to respond to emergencies and provide essential services. Organizational and systems capacity measures and assessments are important components of the public health infrastructure. Hospitals and governments have a long tradition of using financial indicators to assess fiscal and operational activities. We reviewed the literature on how hospitals use financial indicators to monitor financial risk, promote organizational sustainability, and improve organizational capacity. Given that financial indicators have not generally been employed by public health practitioners, we discuss how these measures can be applied to local public health agencies to improve their organizational capacity

The Motor Fuel Tax Evasion Issue in Kentucky

Tax evasion is an elusive and burgeoning problem. Methods of tax evasion are continually changing and adapting to new methods of tax enforcement. However, there are strategies that can reduce the potential loss due to fuel tax evasion. This study of fuel tax evasion in Kentucky and the southeastern states provides additional information regarding the causes and nature of the road fund tax evasion problem, and identifies state and federal/state efforts to mitigate the tax evasion challenge. The concepts, issues, and recommendations in this report can aid in reducing evasion of the Kentucky motor fuels tax., thereby, enhancing the efficiency and equity in the administration of the motor fuels tax and increase the resources collected in the Kentucky Road Fund

Legislation Review and Recommendations to Reduce Evasion of Kentucky Road Fund Revenues

Kentucky, like other states, is facing fiscal challenges in providing expanding public services demanded by citizens. One danger of constrained fiscal resources and shortsighted political horizons is the tendency to neglect the investment and maintenance of long-term infrastructures like highways. The Kentucky road fund protects against these dangers by providing earmarked resources for the state\u27s roadways, insuring that basic infrastructure needs are met. However, evasion of road fund revenues decreases the funds available to meet the needs of Kentucky\u27s transportation infrastructure. For these reasons, the Kentucky Transportation Cabinet is interested in developing policy recommendations intended to mitigate evasion of road fund revenues. This report compliments the final report The Motor Fuel Tax Evasion Issue in Kentucky, 1996 (KYSPR 93-153) which identifies potential concerns in the nature and causes of road fund tax evasion. This current study constitutes an informal report that is complimentary to research report KTC-96-16. Moreover, it provides additional detail regarding the legislative action that addresses fuel tax evasion in the southern region. This report also develops estimates of the revenues lost through evasion in vehicle registration and licensing in the Commonwealth. The Federal Highway Trust and the Kentucky road fund were established to provide earmarked resources for maintaining and building federal and state roadways. Two major sources of the revenues for the Kentucky road fund are the motor fuels tax and vehicle licensing and registration fees/taxes. Evasion of these revenues diminishes the resources available to maintaining and building state roadways. There are three studies that have estimated the fuel tax revenue lost through evasion. The U.S. Department of Transportation estimated that evasion of the gasoline tax is between three and seven percent of the gallons consumed nationally, while diesel fuel tax evasion is 15 to 25 percent of gallons consumed nationally. Evidence of fuel tax evasion is provided in the Council of State Governments (CSG) study that estimated nearly 1.2 billion dollars of aggregate state fuel tax revenue was evaded in fiscal year 1993. Estimates of the fuel tax evasion occurring in Kentucky are provided in the KTC final report The Motor Fuel Tax Evasion Issue in Kentucky (1996). This study estimates that up to 20 million dollars of Kentucky fuel tax revenue was potentially evaded in fiscal year 1993. Estimates of revenue lost through evasion of vehicle registration and licensing are less common. The CSG report estimated that between 421 to 654 million dollars of aggregate state revenue from licensing and registration were evaded in fiscal year 1993. Similar analysis is applied to obtain the evasion losses of Kentucky vehicle registration and the associated ad valorem taxes as reported in Appendix B. The estimation predicts that over 239 thousand vehicles were unregistered in Kentucky in 1994, resulting in a road fund revenue loss that approach 50 million dollars

Managing Risk and Growth of Nonprofit Revenue

Managers of nonprofit organizations are challenged to manage revenue growth and risk (i.e., volatility) in order to sustain current and future financial operations. Although the negative repercussions of revenue risk are generally perceived as undesirable, not all risk is bad. If higher levels of revenue risk are compensated with a greater amount of revenue growth, then organizations may rationally pursue volatile revenues that produce growth. This article examines the extent to which a reliance on major revenue sources by nonprofit organizations affects the magnitude of total revenue volatility as well as the pace of total revenue growth. A monitoring application is introduced that can be used to compare the effectiveness of revenue management among similar nonprofit organizations. It can also be used to guide nonprofit managers striving to achieve sustainable financial growth for their organizations

Estimating the Costs of Foundational Public Health Capabilities: A Recommended Methodology

The Institute of Medicine’s 2012 report on public health financing recommended the convening of expert panels to identify the components and costs of a “minimum package of public health services” that should be available in every U.S. community. The report recommended that this minimum package include a core set of public health programs that target specific, high-priority preventable health problems and risks, along with a set of “foundational public health capabilities” that are deemed necessary to support the successful implementation of public health programs and policies. In response to this recommendation, the Robert Wood Johnson Foundation, in collaboration with the US Centers for Disease Control and Prevention and other national professional associations, formed the Public Health Leadership Forum, an expert consensus panel process to identify a recommended set of core programs and foundational capabilities for the nation. The Forum’s initial charge focused on the specification of foundational public health capabilities. The Foundational Capabilities Workgroup was formed as a part of the Forum to identify and define the elements to be included as foundational capabilities for governmental public health agencies at both state and local levels. The Robert Wood Johnson Foundation asked the National Coordinating Center for Public Health Services and Systems Research based at the University of Kentucky to convene a second expert panel workgroup, the Workgroup on Public Health Cost Estimation, to develop a methodology for estimating the resources required to develop and maintain foundational capabilities by governmental public health agencies at both state and local levels. Working in parallel with the Foundational Capabilities Workgroup, this Cost Estimation Workgroup has considered relevant cost-accounting models and cost estimation methodologies, and reviewed related cost estimation studies, in order to make recommendations on an approach for generating first-generation estimates of the costs associated with developing and maintaining foundational capabilities