Economics and Finance

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Low-income workers in Ohio will get additional tax relief as the result of changes made in June to the state’s biennial budget. Following last year’s creation of an earned income tax credit, the legislature chose to expand it — from 5 percent of the federal credit to 10 percent.
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When the Great Recession began to hit states, they had a total of $59.9 billion in reserves. A year later, total budget gaps were nearly double that figure, $117.3 billion.
“States found themselves woefully short in terms of the amount of savings they had to offset the budget shortfalls created by the crisis,” Robert Zahradnik of The Pew Charitable Trusts told lawmakers at the Midwestern Legislative Conference Annual Meeting. “A lot of that is because savings is not the highest priority when it comes to making state budgets.”
The fiscal crisis is over, but it has opened new questions about budget planning and management. Prior to the Great Recession, for example, a fiscal reserve of 5 percent of the total budget was considered a sound target. Now, Zahradnik said, the preferred goal tends to be between 8 and 10 percent.
Part of the reason is that state revenue sources have simply become more volatile, thus the need to better plan for more-extreme “rainy days.”
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Most states in the region have a private license system for the sale of alcoholic beverages. Private enterprises, including liquor and grocery stores, apply for a license to sell alcohol. The licenses are granted at the discretion of the licensing authority in the state.
Three states in the region — Iowa, Michigan and Ohio — are called control states. None of these states operates retail liquor stores, but they do control the sale of distilled spirits at the wholesale level.
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The future of a controversial Indiana “right to work” law (dubbed “right to work for less” by opponents) is now in the hands of the state’s Supreme Court. According to The Indianapolis Star, oral arguments were set to begin in early September. The 2012 law has been ruled unconstitutional by two lower-court state judges. In contrast, it survived a legal challenge in federal court.
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Since 2010, no U.S. state has come close to matching the population boom in North Dakota. Numbers in that state have jumped by close to 8 percent — more than three times the U.S. average.
“I never thought I would read the words, ‘The highest population growth … was in North Dakota,’” Joel Kotkin said during his keynote speech at the Midwestern Legislative Conference Annual Meeting. “It’s just an astounding statistic.”
The state’s oil and gas boom has largely fueled the recent migration patterns, but in his July presentation to the region’s state and provincial legislators, Kotkin argued that there is also more to the story. A mix of economic, demographic and technological realities has made North Dakota and many other parts of the Midwest more alluring destinations for individuals, families and businesses.
“We’re seeing a demographic shift along with the economic shift,” he said. “People are reconsidering their options. Where are they going to live? Where do they want to be?”
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Where are information technology jobs most concentrated? How is automotive job growth shifting across the nation? What areas specialize in businesses related to food processing? This kind of data is now available through a new web-based initiative (...
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Mirroring a national trend, many more people in the Midwest are living in concentrated areas of poverty — a demographic trend that carries with it implications related to everything from crime and health, to economic and educational opportunity.
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Concerned about the economic impact of a proposed fee increase on truck shipments moving across the U.S.-Canada border, the Midwest’s state and provincial legislators are urging the U.S. Department of Agriculture to reconsider the plan.
The Midwestern Legislative Conference adopted the resolution on the final day of its four-day Annual Meeting in Nebraska. It originated from the MLC’s Midwest-Canada Relations Committee, which met on the first day of the meeting.

ANCHORAGE, ALASKA—While states across the country have made changes to their public employee retirement plans, some of them have ended up in court for one key reason. “There’s a theme that comes where reform efforts have worked and where they don’t and a lot of them end up getting them challenged in court,” Robert D. Klausner, a partner with a law firm that handles retirement system cases, said during the CSG policy academy, “Accounting for the State of Public Pensions,” Saturday, Aug. 9. “The places where it doesn’t get challenged in court are places where employees have been engaged early in the process.”

ANCHORAGE, ALASKA—While public pension plans still face problems, the situation isn’t as bleak as the headlines report, according to Dana Bilyeu, executive director of the National Association of State Retirement Administrators. In fact, public pension plans across the country are 80 percent funded, on aggregate; that’s down from 101 percent funded in 2001, Bilyeu said. She spoke at The Council of State Governments policy academy, “Accounting for the State of Public Pensions,” Aug. 9.

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