States Finding Fiscal Surprise: A Cash Surplus

[Demeter]

Source: NYTimes





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June 11, 2007
States Finding Fiscal Surprise: A Cash Surplus
By JENNIFER STEINHAUER

State lawmakers across the country, their coffers unexpectedly full of cash, have been handing out tax cuts, spending money on fixing roads, schools and public buildings, and socking something away for less fruitful years.

Budget surpluses have largely stemmed from higher than expected tax collections — corporate tax revenues alone were 11 percent higher than budget estimates — and booming local economies. There has also been some relief in Medicaid spending, which fell from an 11 percent annual growth rate to something closer to 7 percent in the past few years.

More than 40 states have found themselves with more money than they planned as they wound down their regular sessions. Governors in 23 of those states proposed tax cuts, and a majority of states with surpluses chose to shore up their roads, schools and rainy day funds...The extra cash over the last two budget sessions (many states work on a two-year cycle) is at the highest level since 2000, state budget experts say. States, burned by several years of shortfalls, kept their estimates of total revenues on the conservative side and are now reaping plenty...Like teenagers who went without allowance, legislators have been working off pent-up demand. Many states are largely using surpluses to tackle long-term and costly problems like the uninsured and crumbling infrastructures....

Over all in the 2007 fiscal year, which ends at the end of this month, state spending in the 50 states totaled $616 billion, an increase of about 8.6 percent over 2006, according to a report by the National Governors Association and National Association of State Budget Officers. The average annual growth rate over the past three decades has been 6.5 percent, the report said.

Only a handful of states have had to cut budgets, led by Michigan, which has suffered six straight years of job losses. Texas issued the largest property tax cut in its history — $14.2 billion for the biennium, representing roughly a one-third decrease for average home owners....




Catherine Billey contributed reporting.

Read more: http://www.nytimes.com/2007/06/11/us/11legislature.html?_r=1&ref=us&oref=slogin

[rpannier]

1. Excellent

Universal health care would be nice.

[Demeter]

2. Not So Good In Michigan, My Home

And I'm sure George will figure out a way to screw the other states out of that money right quick.

[Toots]

9. Sounds like they are doing the exact opposite

Medicare spending fell from 13% to 7%. Give the money to the wealthy and screw the sick..

[Catch22Dem]

3. Good, they can spend it on gasoline for state vehicles (n/t)

[bluerum]

4. Only a handful of "Blue" states have had to cut budgets. MA is one of them.

I read this with a great deal of skepticism.

They forgot to add, "After several years of shortfalls and steadily increasing property taxes, states can now look to repair neglected infrastructure."

They are also going to have to figure out how to bail out the homeowners and lenders getting burned by ballooning mortgages.

[Demeter]

5. You'll Wait a Long Time for That To Happen!

After all, your average homeowner isn't worth keeping--not unless the drain affects tax revenues!

[skids]

6. 6.5 percent? Sounds about as much as...

...the true rate of inflation.

[displacedtexan]

7. A few paragraphs down, however...

shows that these states didn't spend a damned dime on things like
higher education, roads, or bridges, etc. "early in the decade."

The dollars now needed to fix infrastructure problems are worth a
lot less than they were when the states weren't spending.

Did that make any sense? I need more coffee.

[DFW]

8. Typical Texas

The general state of our public schools is pitiful.
We have one shining light in Highland Park (Dallas)
and there is another top Techie-type high school in the
area, but in general, the State public school system needs
a desperate boost--far more so than Ross Perot needs a
reduction in his property tax.

I also note that in general, corporate tax revenues are
responsible for most of this new positive state of affairs.
This makes sense, as I don't know of the empployment
situation having improved for the average working man
or woman out there in the recent past.

[Igel]

15. And they shouldn't spend windfall taxes on on-going services.

I was in California in the early '90s; in the late '80s, tax revenues kept increasing, so spending on services kept increasing.

Then in '92 there was a bit of a recession and California, having a highly progressive income tax at the time, was in deep trouble. Tax revenues were far below expectations; when they suggested cutting the services they'd just increased, there was hell to pay, and all kinds of discretionary items (infrastructure, higher ed, etc.) were cut sharply.

Steady-state expenditures should, with the minimum amount needed for infrastructure and the like, never exceed baseline tax revenues. Look at the most recent recession and assume *that* will be your annual revenues, adjusted for inflation, idefinitely. Then windfalls can be spend on temporary programs, one-shot deals, that kind of thing. Much less pain all around....

[ananda]

10. deceptive re Texas

Texas legislators didn't do that much for Texans.
The so-called property tax cut isn't much really,
and the only good they did, afaict, is to put
127k children back on CHIP (health care).

They didn't do anything to get college tuition
in line, and they didn't do much for teachers
either... and teacher retirees haven't had a
cost of living increase since 2001.

Also, they didn't do anything to contain
pollution or get electricity rates in line...
Our legislators are whores to corporations
and mean-spirited as well.

Go Texas (sarcasm).

[Javaman]

11. when you print enough money, there is always a surplus....

welcome to our fiat economy.

[mbperrin]

12. Well, lessee in Texas,

teachers got a $425 a year raise that their local district can divert for other purposes if they wish, the Guvnor got a $35,000 raise, the attempt to sell off the public highway system to convert to private toll roads didn't succeed, but neither did an effort to restore fuel taxes for highway maintenance.

Billions were held back for so-called property tax relief, although my personal property taxes have increased between ten and eighteen per cent every year since we started talking this nonsense, although I do note that Exxon, Sun, and some other energy folk did indeed save large sums on their mineral property holdings, so yeah, that's Texas.

It's like a whole other country, all right, just pretty much a banana republic in the hands of lackeys and their corporate masters.

Why don't I move? I was born here, and these bastards cannot run me out! Surely even being in league with Satan cannot leave them around forever, can it? ;)

[Historic NY]

13. Pork..............

The more they have the more they shell out in NY..........PORK represent the biggest stumbling block in budget control in NY State Along with both Sheldon Silver & Joe Bruno. Both Dem's & Gop fight over who can hand out our money and look like the good guy to the voter. NY needs school tax reform and the balance should go to reducing the average property owners tax. NY City taxpayer do not pay for separate school tax as those upstate do. My school tax goes up on average of 8-10 per cent yearly and cost more than my entire town taxes. Ny taxes are driving citizens away from the state, they are unfair & unbalanced between the upstate and Ny City.

[Matariki]

14. Does that mean that the BushCo. is working on how to get their greedy hands on the surplus?

What can Halliburton overcharge the states for... let's see...