Tag: state budgets

Cross posted from The Stars Hollow Gazette

Democratic Connecticut Governor Dannel Malloy (@GovMalloyOffice) joined the panel on Up with Chris Hayes to discuss the untold story of the Great Recession: how cash strapped states and local governments are dealing with the aftermath of the financial crisis and how they could be affected by the outcome of so-called “fiscal cliff” negotiations. Host Chris Hayes, along with Gov. Malloy, talk about austerity on the state level cash strapped states resort to extreme measures to balance their budgets and the different way states are finding to raise cash.

They are joined in the discussion by Elizabeth Pearson, fellow at The Roosevelt Institute; Maya Wiley (@mayawiley), founder and president of the Center for Social Inclusion; Veronique de Rugy (@veroderugy), senior research fellow at the Mercatus Center at George Mason University; and Dedrick Muhammad, senior economic director at the NAACP.

Cross posted from The Stars Hollow Gazette

With states and cities struggling to balance their budgets with lay offs of workers, cuts to benefits and wages, as well as, reduction of aid to schools, hospitals, clinics, and other agencies, states government desperate for revenue are looking to on-line gambling but may run up against the obstacle of the Justice Department:

It’s an idea gaining currency around the country: virtual gambling as part of the antidote to local budget woes. The District of Columbia is the first to legalize it, while Iowa is studying it, and bills are pending in places like California and Massachusetts.

But the states may run into trouble with the Justice Department, which has been cracking down on all forms of Internet gambling. And their efforts have given rise to critics who say legalized online gambling will promote addictive wagering and lead to personal debt troubles.

The states say they will put safeguards in place to deal with the potential social ills. And they say they need the money from online play, which will supplement the taxes they already receive from gambling at horse tracks, poker houses and brick-and-mortar casinos.

“States had looked at this haphazardly and not very energetically until the Great Recession hit, but now they’re desperate for money,” said I. Nelson Rose, a professor at Whittier Law School, where he specializes in gambling issues.

When it comes to taxing gambling, he said, “the thing they have left is the Internet.”

Meanwhile the Obama administration is mulling over whether to take a tougher approach to economic issues:

Mr. Obama’s senior adviser, David Plouffe, and his chief of staff, William M. Daley, want him to maintain a pragmatic strategy of appealing to independent voters by advocating ideas that can pass Congress, even if they may not have much economic impact. These include free trade agreements and improved patent protections for inventors.

But others, including Gene Sperling, Mr. Obama’s chief economic adviser, say public anger over the debt ceiling debate has weakened Republicans and created an opening for bigger ideas like tax incentives for businesses that hire more workers, according to Congressional Democrats who share that view. Democrats are also pushing the White House to help homeowners facing foreclosure.

Even if the ideas cannot pass Congress, they say, the president would gain a campaign issue by pushing for them.

“The president’s team puts a premium on being above the partisan fray, which is usually the right strategy,” said Senator Charles E. Schumer of New York, the No. 3 Democrat in the Senate. “But on this issue, when he knows what the right thing to do is, and when a rather small group on one side is blocking any progress, you have to be willing to call that group out if you want to get anything done.”

While Obama drags his feet staying with his bipartisan tick that has made matters worse, the housing market continues to sink under the weight of 4.6 million homes with delinquent mortgages and real estate owned sitting empty and the jobs market stagnates with the U3 at 9.1% mostly because 193,000 people dropped out of the labor force and weak jobs growth. There were only 117,000 jobs created in July not nearly enough to even keep up with population growth.

Calculated Risk has two great graphs that illustrate the two problems:

Click in images to enlarge

It well past time for Obama and the Democrats to stop whining about the obstructive Congress. So whatsoever the White House puts forth won’t get passed, at least make it a fight you can take to the street to say you at least tried to do something. Pragmatic won’t get it done, it hasn’t for the last three years.

  It’s the economic timebomb that we all knew would go off, but kept hoping that a heavenly miracle would save us.

  Well, time is up, and miracles are in short supply.

 The report, a result of a survey by the National League of Cities, the U.S. Conference of Mayors and the National Association of Counties, showed local governments are moving to cut the equivalent of 8.6 percent of their workforces from 2009 to 2011. That suggests 481,000 employees will lose their jobs, according to the report, which said the tally may yet rise.

 That’s bad, but the real story is actually much worse.

   While there is plenty of talk about the economic recovery, there is barely a whisper about what is just a few weeks ahead. It’s not any one thing. It’s a combination of three (and possibly four) different events that will deliver devastating body-blows to the economy.

  They are all being talked about, but no one that I’ve seen has put them all together.

That’s where I come in, the doom-and-gloomer, with the news that no one wants to think about, but you are better off knowing now rather than later.

Economist James Heintz is Associate Director of the Political Economy Research Institute at the University of Massachussetts, Amherst.

Heintz has written on a wide range of economic policy issues, including job creation, global labor standards, egalitarian macroeconomic strategies, and investment behavior. He has worked as an international consultant on projects in Ghana and South Africa, sponsored by the International Labor Organization and the United Nations Development Program, that focus on employment-oriented development policy.

In 2000 Heintz co-authored with The Center for Popular Economics and Nancy Folbre The Ultimate Field Guide to the U.S. Economy: A Compact and Irreverent Guide to Economic Life in America, and is also author of a variety of other books and papers on employment and economics over the past decade or so.

His current work focuses on global labor standards, employment income, and poverty; employment policies for low- and middle-income countries; and the links between macroeconomic policies and distributive outcomes.

  Insolvency is no longer just for California. The dreaded word “bankruptcy” is now being whispered in Chicago.

 While it appears unlikely or even impossible for a state to hide out from creditors in Bankruptcy Court, Illinois appears to meet classic definitions of insolvency: Its liabilities far exceed its assets, and it’s not generating enough cash to pay its bills. Private companies in similar circumstances often shut down or file for bankruptcy protection.

  “I would describe bankruptcy as the inability to pay one’s bills,” says Jim Nowlan, senior fellow at the University of Illinois’ Institute of Government and Public Affairs. “We’re close to de facto bankruptcy, if not de jure bankruptcy.”

 Suppliers in Illinois are not being paid (an average 92 day delay in payment), worker salaries are unreliable, and the University of Illinois may not be able to make payroll this spring.

Economist James Heintz is Associate Director of the Political Economy Research Institute at the University of Massachussetts, Amherst.

Heintz has written on a wide range of economic policy issues, including job creation, global labor standards, egalitarian macroeconomic strategies, and investment behavior. He has worked as an international consultant on projects in Ghana and South Africa, sponsored by the International Labor Organization and the United Nations Development Program, that focus on employment-oriented development policy.

In 2000 Heintz co-authored with The Center for Popular Economics and Nancy Folbre The Ultimate Field Guide to the U.S. Economy: A Compact and Irreverent Guide to Economic Life in America, and is also author of a variety of other books and papers on employment and economics over the past decade or so.

His current work focuses on global labor standards, employment income, and poverty; employment policies for low- and middle-income countries; and the links between macroeconomic policies and distributive outcomes.

Heintz is recently the author of a new research paper: “The Grim State of the States: The Fiscal  Crisis Facing State and Local Governments.” (.PDF), which opens with:

The collateral damage of the global financial crisis is extensive-record job losses, falling incomes, and increasing uncertainty that paralyzes workers, consumers, and investors alike. State and local governments have joined the list of casualties. They are facing the worst budget crisis in decades and the situation will likely get worse before it gets better. If not enough is done, the fiscal crunch will have far-reaching implications for the severity of the crisis and the well-being of the American people.

A sample of the current budget situation from the 50 states shows that the fiscal crisis has spread nationwide.

At the time of this writing, Arizona is projecting a $1.6 billion shortfall at the state level for the 2009 fiscal year, and this is expected to expand to $3 billion for fiscal year 2010.1 Georgia State University has recently forecast that Georgia’s revenues will drop by 6 percent in fiscal year 2009, opening up a $2.5 billion gap. Minnesota must accommodate a $426 million deficit in the current fiscal year which is projected to grow to $4.8 billion in 2010-2011.3 New York is anticipating a $1.6 billion current-year shortfall and this is expected to climb to an unprecedented $13.8 billion gap in the 2009-2010 fiscal year.

The list of states facing severe financial  problems goes on and on. According to the Center on Budget and Policy Priorities, a Washington, D.C.-based research institute, as of January 2009 at least 46 states have reported facing budget shortfalls for the current and/or the next fiscal year, totaling an estimated $99 billion.

These are just the initial estimates of the impact that the economic crisis will have on state revenues and budgets. The severity of the budget crisis ultimately depends on how long and how deep the downturn becomes and the degree of ongoing state support that the federal government ultimately provides over the next several years.

Depending on the trajectory of the crisis, the Center on Budget and Policy Priorities forecasts that the combined state-level budget shortfalls may add up to over $350 billion by 2011.

Here Heintz talks about that new paper with Paul Jay of The Real News in the first of a multi-part interview, and concludes from his research that 900,000 state workers, many in education, across the US could lose their jobs as state deficits explode: