State Tax Revenues Up But Volatility Continues

Albany, N.Y.- States' tax collections have been growing for 13 straight quarters now. While inflation-adjusted state tax revenues are presently above the recessionary peaks, states continue to face fiscal challenges, particularly due to artificially propped-up personal income tax revenues, according to the latest State Revenue Report from the Rockefeller Institute of Government.

State tax revenues were up 8.6 percent for the first quarter of 2013 compared to the same period of 2012, according to the report by Lucy Dadayan and Donald J. Boyd. States reported the largest growth in personal income tax collections at 18.4 percent, largely due to the acceleration of income into calendar year 2012.

Big Cuts In State and Local Government Jobs

Combined state and local government employment across the U.S. has declined significantly since the Great Recession began in December 2007, according to a new report from the Rockefeller Institute of Government.

During the past year, state and local governments cut a total of about 489,000 jobs, a decline of 2.5 percent. Percentage cuts in state and local government employment are actually greater, if we compare current employment levels to peak levels. As of December 2012, for the nation as a whole, state and local government employment is down 3.4 percent or 681,000 jobs from the peak level recorded in August of 2008.

The report shows that the impact of the Great Recession on state and local public employment has been much deeper than any other recession in the last 50 years.

"Made in NY" is a high-value label

Products made in New York generate comparatively high levels of wages and spinoff economic activity, according to a new report prepared by the Rockefeller Institute for the Manufacturing Research Institute of New York State. Even after recent losses, the state ranks sixth in the nation in total manufacturing jobs, according to the report. Including other jobs that depend on manufacturing, the sector supports one in three payroll dollars in much of upstate New York. Yet New York City is the largest single center of manufacturing in the state, with more than 81,000 jobs and $4.2 billion of payroll in 2009.
In economic terms, the wealth created and added to the economy through manufacturing processes represented 52.7 percent of the total value of products shipped from New York in 2008, compared to 41.5 percent nationally. The state’s largest manufacturing sector, computers and electronic products, employs nearly 65,000 New Yorkers, with total payroll of $5.5 billion and average salaries of $84,292. Other major sectors include fabricated metal products, food processing, machinery and chemicals (including pharmaceuticals).
The report, released Monday at a Syracuse event announcing the launch of the Manufacturing Research Institute, is now available on the Rockefeller Institute Web site.

State government employment drops below level at start of recession

Total employment by state governments has dipped below its level at the start of the recent recession for the first time, a new “Data Alert” from the Rockefeller Institute of Government shows. After rising for eight consecutive months after the recession began in December 2007, state and local government employment has declined for 17 of the last 23 months as states have experienced record declines in revenue. An extension of extraordinary federal aid to states, expected to be approved by Congress, “would likely dampen but not eliminate pressure for additional cuts in state and local government employment,” Institute researchers Donald J. Boyd and Lucy Dadayan write.
Click here for the Data Alert.

With the health reform law adopted, the questions begin

From the Rockefeller Institute of Government [info@rockinst.org]

Congress may have concluded its long journey to pass health reform legislation, but questions about the law's implementation are only just beginning. Two Institute experts offer commentary about some of the issues that New York and the nation now face.
A key feature of the newly enacted law is expansion of Medicaid, the government health insurance program for the poor. Courtney Burke, director of the Institute's Health Policy Research Center, points out that New York already spends more than any other state on Medicaid — a total of $51 billion under Governor David Paterson's proposed budget. But much needs to be done to ensure that New York gets the best value — and health care — for its dollar, she says in a commentary now on the Institute's Web site. Burke also contributed to the March 25 Huffington Post blog, with her thoughts on the ingredients needed for effective implementation of the new law at the state level.
Deputy Director Robert B. Ward, who heads the Institute's research on state and local finances, writes in a separate commentary that the new law presents all sorts of questions whose answers may not be revealed for years. Among them: How much will the expanded coverage provided by the new law ultimately cost federal, state and local governments? His observations are also available on the Institute's Web site.

Redistricting process

Speakers at a Feb. 9 forum at the Rockefeller Institute addressed how a shift in New York toward more Democrats and more Downstate residents is likely to play out in the redistricting process that will follow this year's census. Critics charge the process has been unfairly driven by incumbent politicians' interests in holding on to power. The forum — Redistricting Reform: Visions for the Future in New York State — was co-sponsored by the Institute and the League of Women Voters of New York State in honor of the League's 90th anniversary.
A summary, audio and videos of the event are now available on the Institute's Web site.

Richard Nathan's "Social Science in Government"

Richard P. Nathan's book Social Science in Government uses rich histories of prominent policy issues and descriptions of major studies of welfare and job programs to bring to life crucial questions about how social science can best serve social policy. Nathan, who recently retired from the Rockefeller Institute after 20 years as its director and co-director, is a social scientist who spent many years conducting evaluation studies of what works — and what doesn't work — in domestic public affairs. The book presents a lively retrospective account of a career as an insider and outsider in American government and academe.
The Institute has now made Social Science in Government available in its entirety online. You can find it here.

New papers, presentations from Rockefeller Institute

Trends in state and local government finance, social welfare spending and gambling revenues to states are among the topics Rockefeller Institute researchers have explored in recent conference papers and presentations. The following papers and presentations are now available from the Rockefeller Institute Web site:
• The Decline of States in Financing the U.S. Safety Net: Retrenchment in State and Local Social Welfare Spending, by Thomas Gais, Lucy Dadayan and Suho Bae, presented at the “Reducing Poverty: Assessing Recent State Policy Innovations and Strategies” conference at Emory University, Nov. 19-20.
• State Budgets, Health Care, and Health Care Reform, presented by Donald J. Boyd to the National Academy of Public Administration, Nov. 19.
• Discussant comments on “Fiscal Sustainability Issues & Options,” presented by Donald J. Boyd at the National Tax Association Annual Meeting, Nov. 14.
• Trends in Gambling Revenue to the States, presented by Lucy Dadayan to Stop Predatory Gambling, Nov. 9.
• State Budget Gaps: Consequences for Policy, Now and in the Future, presented by Robert B. Ward to the Association for Public Policy Analysis and Management Annual Research Conference, Nov. 5.

Rockefeller Institute Report Shows Smaller Gambling Jackpot for States

State and local government revenues from authorized gambling operations declined by 2.8 percent from 2008 to 2009, marking the first time those revenues have declined in over three decades, according to a new report issued today by the Rockefeller Institute. Data on the decline come as states continue to examine casinos, video-lottery terminals and other gambling operations as potential sources of new revenue — with 25 or more states considering such proposals in the past year.

“The historical tendency for revenues from existing gambling operations to grow at a significantly slower pace than other state revenues may hold important lessons for states as policymakers consider further expansion of casinos, racinos and other gambling activities,” write the report's authors, Lucy Dadayan and Robert B. Ward. “Expenditures on education and other programs will generally grow more rapidly than gambling revenue over time. Thus, new gambling operations that are intended to pay for normal increases in general state spending may add to, rather than ease, long-term budget imbalances.”

To read the report, visit the Institute's Web site.

States' Tax Revenues Take Biggest Plunge on Record

Taxes collected by the 50 states dropped by 11.7 percent overall during the first quarter of 2009, compared to the same period a year earlier — the largest such decline in the 46 years for which quarterly data are available, according to the latest report on state finances from the Rockefeller Institute of Government.

Overall state tax revenues fell to the lowest first-quarter level since 2005, according to the Institute. The decline in personal income tax was particularly sharp, with an unprecedented decline of 17.5 percent, as the weakened economy continued to hammer state budgets. Forty-five of the 50 states experienced revenue drop-offs.

Video of Education Commissioner Mills' Speech at Rockefeller Institute

The next round of education reform — including establishment of new national standards — will be driven by the states, with New York among those leading the way, State Education Commissioner Richard P. Mills told educators, legislators and researchers at a May 4 forum hosted by the Rockefeller Institute of Government. Mills predicted that the $4.4 billion in federal stimulus money intended to reward states that have taken the lead in pursuing federal reform priorities will be won by consortia rather than individual states. Mills' talk also covered a range of other current education topics, including standards, outcomes, financing, technology and more.

State/Local Sales Tax Weakest in 50 Years

State tax collections for the fourth quarter of 2008 declined by 4 percent from the same quarter a year earlier, according to a new report by the Rockefeller Institute of Government. After adjusting for inflation, combined state and local sales tax revenue declined more in October-December 2008 than in any quarter since 1959. Early figures for state tax revenues in the first quarter of 2009 show an overall decline of more than 12 percent compared to a year earlier, a further dramatic worsening of fiscal conditions nationwide. Read the news release.

The Stimulus Needs the States

"When the ink is dry on the massive, $787 billion 'federal' package to stimulate and grow the economy, much of the job actually will be carried out not by the federal government alone, but through the states." David Shaffer and David J. Wright of the Rockefeller Institute examine why that is – and stress the importance of tracking how well it works.

President Obama's Infrastructure Spending Program - Keeping It Simple

Rockefeller Institute of Government Co-Director Richard P. Nathan recently wrote about President Obama’s infrastructure spending program and job-creation effort. Nathan advises a common-sense approach that works closely with the states, in order to take advantage of states’ knowledge of the local terrain.

Health Insurance Coverage for Small Businesses

As we'ver seen, the health insurance crisis isn't just for those 47 million Americans who don't have health insurance, it's for the 250 million that do. Many are offered - or not - by small business.

The Rockefeller Institute of Government’s Health Policy Research Center has issued a series of reports on private insurance coverage for small businesses. The reports, which were funded by the New York State Health Foundation, include a paper titled "From Access to Affordability," which is a nationwide scan of the various strategies states are using to try to address the growing problem of health insurance coverage for small businesses. In addition to the 50-state research, there are also three in-depth case studies on the strategies being used by Maine, Minnesota, and New Jersey and a comprehensive report that combines what was learned from the state scan and field research. For copies of the reports, please visit www.rockinst.org. Read the press release.

Gambling Revenue to the States

Gambling revenue plays a consistently important role in state finances, but slower growth in recent years may present new budget challenges for states, according to a new Rockefeller Institute report. States vary widely in their reliance on gambling revenue, the report finds. Read From a Bonanza to a Blue Chip? Gambling Revenue to the States.

"For more than two decades, states saw lotteries and casinos as a bonanza of new dollars for education and other programs," Institute researchers write. "Gambling revenue is now at an all-time high, but growth is slowing due to objections about social impacts and broader economic trends. From a fiscal perspective, state-sponsored gambling now resembles a blue-chip stock — reliably generating large amounts of cash, but no longer promising dramatic growth in revenue."

The report shows that states vary widely in their reliance on gambling revenues. Nevada, West Virginia, and Rhode Island lead the states in the proportion of their total revenues obtained from gambling, while New York, Illinois, Florida, and New Jersey are at the top in total dollars collected.

The Rockefeller Institute of Government is the public-policy research arm of the State University of New York.

Community-College Utilization and Tuition Vary Widely

Another Rockefeller Institute Study:
Every state offers community colleges as the first rung on the ladder of higher education. They prepare students for four-year colleges, educate key professions like nursing and firefighting, offer job training and basic skills, and bolster economic development. But a new report from the Rockefeller Institute finds that the 50 states differ widely in the extent to which they use their community college systems. Read the press release.

Layered Local Governments in New York

From the Rockefeller Institute of Government:
New York's local governments are among the most heavily "layered" in the nation, Rockefeller Institute Senior Fellow Donald J. Boyd writes in a new paper. Unlike most states, New York is characterized by at least two general-purpose local governments in every region except New York City. Boyd was a consultant to the New York State Commission on Local Government Efficiency and Competitiveness, chaired by former Lieutenant Governor Stan Lundine. The Commission has just issued a report with recommendations to make local government more streamlined and cost-effective. Robert Ward, the Institute's deputy director, analyzed the Lundine Commission's report in a May 1 commentary for WAMC/Northeast Public Radio.

States' Tax Revenues Weaken

States across the country are experiencing "a classic nutcracker effect," as revenues weaken and costs rise sharply, the Rockefeller Institute's latest State Revenue Report finds. After adjusting for inflation and legislated tax changes, states' tax revenues dropped by 4.3 percent in the most recent quarter. Read the press release.

Spending for children

The Rockefeller Institute has updated an earlier report on spending for children in the American states. The new report presents data for 1992, 1998, 2003, and 2004 on state and local government expenditures in major programs designed for children or in which children are the main beneficiaries.

The report finds that state and local governments spent $467 billion of their own-source funds on major programs for children in fiscal year 2004. About 9 out of 10 of all dollars spent on children went to K-12 education. The remaining funds supported health programs and a category of expenditures encompassing a variety of nonhealth, noneducation programs (including TANF/AFDC, foster child and other child welfare services, child care, and child support enforcement).

Real (inflation-adjusted) spending per child by state and local governments increased by 34 percent between 1992 and 2004. The fastest growing expenditure during this period in the area of health, which nearly doubled in real per-pupil terms. TANF/AFDC expenditures declined between 1992 and 2004, while other social service programs grew.

States varied greatly in their levels of spending. Total per child spending ranged from $9,297 in New Jersey down to $3,699 in Utah.

Future reports will examine the relationship at the state level between state spending for children and state fiscal capacity and the racial composition of persons living in the state. The Institute website will also soon make available the data and state profiles produced from of the data.

The research has been supported by the Annie E. Casey Foundation