Fiscal Outlook

Jennifer Burnett, CSG's fiscal policy expert, outlines the top five issues related to fiscal and economic development policy, including state revenue recovery, federal funds availability, Medicaid, state employee and retiree health care costs, and rethinking economic development strategies.  

The 113th Congress was sworn in today and the new freshman class found their seats still warm from predecessors who worked well into the New Year to pass a cliff averting tax compromise.   While the drama over the fiscal cliff may have passed for the moment, the new Congress faces another set of crisis-laden deadlines that could have big implications for state budgets.

Despite all of the drama over the past few weeks, it looks like both sides are ready to split the difference.  The President began the negotiations by calling for $1.6 trillion in tax revenue, Speaker Boehner countered with $800 billion.  A deal would likely include roughly $1.2 trillion, the midpoint between both first offers.  The president began by stating that any deal must spare social safety net programs and offering only $400 billion in ill-defined cuts while Speaker Boehner said that entitlement reform and other spending cuts must form the majority of any deal.  Both sides are now hinting at a compromise including equal amounts of revenue and spending cuts.  

The American economy stands at the edge of a precipice created by expiring tax cuts and a host of spending reductions that could collectively shave $600 billion from the U.S. gross domestic product next year. This session featured a presentation and discussion led by Barry Anderson, deputy executive director of the National Governors Association, on the potential impact of the fiscal cliff and the prospects for congressional action to forestall it. Anderson previously served as acting director of the Congressional Budget Office, as well as in senior leadership roles in the Office of Management and Budget, the International Monetary Fund, and the Organization for Economic Cooperation and Development.

Idaho Rep. Maxine Bell began the fiscal session of The Council of State Governments 2012 National Conference by stating the obvious.  “We’re still in fiscal trouble,” said Bell, who served as moderator for the session at Dell headquarters in Round Rock, Texas. But speakers at the session, “State Revenue Outlook 2013 and Beyond,” offered some encouraging news on some of the major issues facing state governments—budgeting, revenue volatility and public pensions.

While state revenues are rebounding from the Great Recession, the budget situation in many states is still volatile. States also continue to grapple with devising strategies to enhance the funding position of their public pension plans. Attendees heard fiscal experts describe policy options available to state policymakers to help smooth out the unevenness in state revenue inflows and evaluate efforts to bolster public pension plans.

The American economy stands at the edge of a precipice created by expiring tax cuts and a host of spending reductions that could collectively shave $600 billion from the U.S. gross domestic product next year. This session featured a presentation and discussion led by Barry Anderson, deputy executive director of the National Governors Association, on the potential impact of the fiscal cliff and the prospects for congressional action to forestall it. Anderson previously served as acting director of the Congressional Budget Office, as well as in senior leadership roles in the Office of Management and Budget, the International Monetary Fund, and the Organization for Economic Cooperation and Development.

Stateline Midwest ~ November 2012

All 11 Midwestern states have laws on the books to keep their budgets balanced from year to year. But very few of them are living up to the intent of these constitutional or statutory requirements, says Sheila A. Weinberg, founder and CEO of the Institute for Truth in Accounting, which earlier this year published its second edition of “The Financial State of the States.”

It took a storm of unprecedented proportions for it to happen but Superstorm Sandy, in forcing the shutdown of bridges and tunnels, subways, shipping routes and airports, managed to accomplish what months of campaigning could not: putting infrastructure front and center in the 2012 election (or at least disrupting the regular political dialogue and partisanship momentarily). As we enter the campaign’s final weekend, here are some links to ponder about Sandy, the election and what’s at stake for the future of the nation’s infrastructure.

Stateline Midwest ~ July/August 2012

In 2000, more than half of the U.S. states were fully funding their state pension systems. By 2010, Wisconsin stood alone as the only state that had set aside enough money to meet 100 percent of its long-term pension liabilities.

Perhaps most concerning of all, funding levels in 2010 were below 80 percent in 34 states, including Illinois, Indiana, Kansas, Michigan, North Dakota and Ohio....

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