Why Are States So Strapped for Cash? There Are Two Big Reasons

[phaster]

[quote]
Why Are States So Strapped for Cash? There Are Two Big Reasons

The proportion of state and local tax revenues dedicated to Medicaid and public pensions is the highest since the 1960s

March 28, 2018

…As state and local officials prepare their next budgets, many are finding that spending decisions have already been made for them by two must-fund line items that barely mattered when baby boomers such as Mr. Leavitt were growing up: Medicaid, the state-federal health insurance program for the poor and disabled, and public-employee health and retirement costs.

These days, they consume about one out of every five tax dollars collected by state and local governments.

…The resulting revenue squeeze is making it harder for governments to pay for core services such as education, infrastructure, police and fire protection.

…For cities, the budget squeeze means they must rely less on state aid to balance their books.

https://www.wsj.com/articles/why-are-states-so-strapped-for-cash-there-are-two-big-reasons-1522255521
[/quote]

AND given (as I mentioned before) local leadership is dishonest

http://www.TinyURL.com/SanDiegoSpikingPension

and dumb

http://www.TinyURL.com/PensionRebuttal

WRT managing a pension portfolio,… 99.9% certain there is no way to avoid TSHTF

[spdrun]

Too much funding for our military and its adventures abroad, not enough money going back to states. Cut certain parts of the military — parts of it have become a parasitic organization.

[phaster]

[quote=spdrun]Too much funding for our military [industrial complex] and its adventures abroad, not enough money going back to states. Cut certain parts of the military — parts of it have become a parasitic organization.[/quote]

http://www.youtube.com/watch?v=OyBNmecVtdU

interesting watching news reports of political leadership back in the day, who seems “civil” and knowledgable, VS “present day” (where there are unresolved issues in many different areas: economic, environmental, geo-political, civil, etc.)

[SK in CV]

California has a pretty significant surplus.

[Anonymous]

[quote=SK in CV]California has a pretty significant surplus.[/quote]

…as well as significant debt/unfunded liabilities.

[phaster]

[quote=harvey][quote=SK in CV]California has a pretty significant surplus.[/quote]

…as well as significant debt/unfunded liabilities.[/quote]

yup,

for a preview of news headlines of what is 99.9% certain in the future for San Diego, California, etc., all ya have to do is read a news clipping in todays paper,… of another part of the world where leadership is DISHONEST and DUMB about finance

[quote]

[“FILL IN THE NAME,…”] files fiscal plan without layoffs, pension cuts

…Puerto Rico ‘s government submitted a required fiscal plan on Thursday that excludes pension cuts and layoffs sought by a federal oversight board as legislators in the U.S. territory angered by its demands debate a bill that would withhold payments for board member salaries, among other things.

http://www.sandiegouniontribune.com/business/sns-bc-cb–puerto-rico-economic-crisis-20180405-story.html

[/quote]

(aside from the named location) only difference being, the problem(s) in the future are going to be magnitudes worst because of compounding factors

http://www.TinyURL.com/DifferentDay

[spdrun]

PR and CA are not really comparable. For one thing, different age demographics — PR is heavily weighted towards retirees whereas CA is not.

[SK in CV]

[quote=harvey][quote=SK in CV]California has a pretty significant surplus.[/quote]

…as well as significant debt/unfunded liabilities.[/quote]

Debt per capita is pretty much in the middle of the pack for all states. Unfunded liabilities are probably getting better, the recent change in assumptions notwithstanding. Participants are kicking in substantially more. There is light at the end of the tunnel. It’s just a really long tunnel.

[Anonymous]

[quote=SK in CV]It’s just a really long tunnel.[/quote]

It’s at least a generation long.

And that’s using your best-case scenario numbers.

A solution that may work, someday, for our grandchildren, assuming everything goes well, is not really a solution.

And why does an entire generation have to bear this burden?

Because it’s imperative that fifty-something year-old park rangers enjoy a comfortable work-free lifestyle for the next thirty years.

[phaster]

[quote=spdrun]PR and CA are not really comparable. For one thing, different age demographics — PR is heavily weighted towards retirees whereas CA is not.[/quote]

[quote=SK in CV]
Debt per capita is pretty much in the middle of the pack for all states. Unfunded liabilities are probably getting better, the recent change in assumptions notwithstanding. Participants are kicking in substantially more. There is light at the end of the tunnel. It’s just a really long tunnel.
[/quote]

perhaps ya all might want to factor in,…

[quote]
Students rejected from a UC or CSU are leaving California in droves — and may never come back

…The decision to leave the state for college is one a growing number of California families are making. Since 2002, Arizona State University has seen an increase of more than 200 percent in California student enrollment. At Oregon State University, California freshmen made up 3 percent of the incoming class in 2002. By 2017, California freshmen made up nearly 14 percent of Oregon State’s new students.

https://www.scpr.org/news/2018/03/23/81845/thousands-of-qualified-college-hopefuls-will-be-re/
[/quote]

so this news report indicates a trend that to some degree there is a youth brain drain,… which (most likely) is going to have negative “economic” effects in the future

BTW since its the eve of tax day,… one other thing to keep in mind is,… under Trump’s new plan, taxpayers who itemize will be able to deduct their state individual income, sales and property taxes up to a limit of $10,000 in total starting in 2018. Currently the deduction is unlimited!!!

so given yet another (future) limitation,… here its important for taxpayers (in California) to be aware of yet another potential economic head wind (i.e. yet another shovel full of “self-interested political bull-$hit”)

[quote]
That ‘split roll’ you heard about? Less a Prop. 13 fix than a pension bailout

Proposition 13, the landmark 1978 ballot measure credited with touching off a national anti-tax revolution, has never stopped being controversial. Critics say its cap on annual property tax increases and its two-thirds voting requirement for government bodies to impose new or higher taxes has hamstrung California and been a public policy disaster. That argument, of course, is undercut by the fact that — despite these obstacles — state residents still have among the nation’s highest overall tax burdens.

http://www.sandiegouniontribune.com/opinion/editorials/sd-split-roll-proposition-13-story.html
[/quote]

the preverbal straw that is going to break the camel’s back is,… the “California rule” which implies the tax payers are the designated financial backstop for various corrupt/mismanaged pension portfolio(s),… said another way,… taxpayers are between a rock and a hard place WRT various debt obligations

NOTE local politicians and partisan supports of status quo public pension payouts, are silent on the root cause of the problem(s) (e.g. a 13th pension payment, not fully funding the pension in the first place, etc.) because they don’t want to acknowledge the problem they themselves created

as I see things, its important to understand the various mechanisms that caused the problem in the first place, so that they can be addressed,… sadly it seems politicians seem to think that by avoiding the subject that somehow finances will somehow fix themselves,… IT WON’T

http://www.TinyURL.com/DifferentDay

if financial mismanagement which is the root cause of the problem is not addressed, IMHO we are going to see symptoms like homelessness AND prices of various “real estate” continue on an upward trend because those that can afford to live w/ an increased government burden will thrive (up to a point),… while those that cannot afford to live w/ an increased government burden will be crushed!

http://www.TinyURL.com/SanDiegoProp13

[CA renter]

For the record, California’s high income tax rate, high fees, etc. are the result of Prop 13. The state lost billions in revenues when Prop 13 passed, so they had to make it up elsewhere.

And since you’re so concerned about taxpayers and the health of state/county/city finances, have you paid back your unearned tax subsidies, yet?

[Anonymous]

[quote=CA renter]For the record, California’s high income tax rate, high fees, etc. are the result of Prop 13. The state lost billions in revenues when Prop 13 passed, so they had to make it up elsewhere.[/quote]

California’s overall (property, income, sales) tax rate is high relative to other states.

Prop 13 may have created a short-term need for cities to compensate with other taxes. That was 40 years ago.

But today California’s overall property tax rates are not even very low (just below the average of other states.)

The Prop 13 debate has nothing to do with the simple fact that California, in general, has high taxation.

And it has even less to do with the fact that the state has long history of taking on debt and unfunded obligations.

[TeCKis300]

This. The baby-boomers are sitting pretty, after setting themselves up unilaterally to steal from future generations. What happened to taking care of the future generations? They’ve raped earths resources, financially burdened the next generations, and justify it as they’ve worked hard for their just dues. I’ve seen it enough times, done under the thin veil of “legitimate” policy, that they go home feeling good about themselves that they’ve brought value to society. Sad.

[FlyerInHi]

[quote=CA renter]For the record, California’s high income tax rate, high fees, etc. are the result of Prop 13. The state lost billions in revenues when Prop 13 passed, so they had to make it up elsewhere.

And since you’re so concerned about taxpayers and the health of state/county/city finances, have you paid back your unearned tax subsidies, yet?[/quote]

You just obviated any argument to repeal prop 13. If the lost billions have been made up, a repeal of prop 13 would amount to a huge tax increase. No way Jose.

[FlyerInHi]

[quote=TeCKis300]This. The baby-boomers are sitting pretty, after setting themselves up unilaterally to steal from future generations. What happened to taking care of the future generations? They’ve raped earths resources, financially burdened the next generations, and justify it as they’ve worked hard for their just dues. I’ve seen it enough times, done under the thin veil of “legitimate” policy, that they go home feeling good about themselves that they’ve brought value to society. Sad.[/quote]

Young people have the power of the vote but won’t use it. They have the power to change the laws. I think it’s sad that young people don’t vote.

[Author]

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