Today I am testifying before Congress on behalf of the states’ budget officers raising our concerns about the impact of federal uncertainty. Years of short-term federal budgeting through continuing resolutions (CRs) and crises like the fiscal cliff cost money and make it difficult for programs to reach their goals’ full potential. You can read my full testimony here.
Facts You Should Know: State and Municipal Bankruptcy, Municipal Bonds, and State and Local Pensions was produced by the following organizations in early 2013:
With the sequester date set for March 1st, there is still some uncertainty as to what further actions – if any – Congress will take regarding the process of sequestration. At this time, most DC insiders are assuming that Congress will allow the automatic budget cuts to take effect March 1.
The rise of internet sales and electronic commerce over the past fifteen years has prompted states and Congress to reconsider the issue of remote sales tax collection. After years of inaction on the issue, Congress now has three similar, though importantly distinct legislative proposals under consideration in both the House and Senate that would require out-of-state retailers to collect and remit sales taxes.
The latest edition of NASBO’s State Expenditure Report finds that the recent improvement in the national economy has not translated to strong growth in total state spending. This is largely due to the fact that state revenues have not increased as fast as Recovery Act funds have declined, leading to a unique situation in which total state expenditure growth has slowed during the same time that the national economy has been improving.
State fiscal conditions in fiscal 2013 are modestly recovering in step with the slowly improving national economy. General fund spending levels are expected to increase by 2.2 percent this fiscal year, which is less than half their historical average growth rate. Signs of budget volatility have subsided compared to the years immediately following the recession, and fiscal conditions in most states reflect continued fiscal stability.
The state and local government bond markets have held up well throughout the year despite a few high profile municipal defaults or bankruptcies by local governments. The forecasts from some commentators in 2010 and earlier this year predicting a municipal bond crisis have not come to fruition, and a collapse of the municipal debt markets is not likely to arise anytime soon. Certainly states and localities will continue to encounter fiscal strain, but potential defaults or bankruptcies are so few and far between that they are the “exceptions” that prove the “rule”.
Since Election Day, there has been a lot of media coverage about the so-called "fiscal cliff," and state budget officers, like many others, are closely watching Congress and the Administration to see what will happen and how it will affect states. The "fiscal cliff" includes a number of tax and spending policies set to take effect under current law, including: