Category: Government Finance
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Revenue Surge May Be Fake News
May 1 is the deadline for Virginia personal income tax returns, but more than 700 very high income Virginia taxpayers skipped the deadline. As long as they have paid enough tax to cover their liability, they can wait as late as November 1 to file an actual return. That is one the facts stressed by…
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Fix the State Windfall from Federal Tax Reform
by Stephen D. Haner Governor Ralph Northam recently announced the nomination of about two hundred economically-challenged portions of Virginia to become federal Opportunity Zones, a special designation similar to an enterprise zone created by the recent overhaul of federal tax laws. That’s good. But the economic opportunities available to all Virginians from the Tax Cuts…
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No Compromise on the AAA Rating
A downgrade of Virginia’s AAA credit rating could cost the Commonwealth between $33.9 million to $72.7 million in additional interest costs on its roughly $4.8 billion in state debt, says Secretary of Finance Aubrey Layne. “If S&P downgrades and the other two follow, which they usually do, it could cost us millions,” Layne said, as…
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Can the U.S. Outgrow Its National Debt?
In previous posts I have described the Republican-backed 2017 Tax Cuts and Jobs Act as a Hail Mary pass, a gamble that by boosting economic growth the United States can outgrow the burden of chronic deficits and a rapidly accumulating national debt. I wasn’t optimistic, but I was willing to wait and see. After the…
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Petersburg Backs Away from the Precipice
The City of Petersburg looks like it has finally dug out of its fiscal hole. City Manager Aretha Ferrell-Benavides presented a $73 million budget to City Council last week that restores funding to schools and public safety even while building up the cash reserve by $950,000. Last year the city lurched from crisis to crisis…
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Does Anybody Notice the $300 Million Tax Increase Baked into Medicaid Expansion?
Governor Raph Northam and U.S. Senator Mark Warner hit the road yesterday with the media in tow, making the case that Medicaid expansion will free up $421 million over two years for other priorities such as K-12 schools. “When we talk about education, we have to talk about health care,” Warner said during a roundtable…
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Medicaid, Pensions Kneecapping State Budgets
Take heed Governor Ralph Northam! Take heed Virginia House and Senate budget negotiators! One in five tax dollars collected by state and local governments across the United States go to Medicaid and public-employee health and retirement costs. Of the $136 billion growth in inflation-adjusted taxes collected by state and local governments between 2008 and 2016, two-thirds…
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Just a Reminder…
The national debt has passed the $21 trillion mark. It took only six months to get there from $20 trillion. Unlike the last time the U.S. racked up debt this rapidly, the economy is growing, not in a recession. Blame whomever you want — Boomergeddon is coming. It’s just a matter of time.
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Enjoy It While It Lasts
Woo hoo! Tax cuts and spending increases — it doesn’t get any better than this. The United States is about to enjoy its biggest fiscal stimulus since Barack Obama’s American Recovery and Reinvestment Act of 2009. All this spending and tax cutting is going to feel great for the next couple of years — especially…
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The New Normal: Rising Interest Rates
The United States enjoyed a three-decade decline in interest rates, beginning with the early-1980s quashing of inflation by Federal Reserve Board Chairman Paul Volker and culminating with Ben Bernanke’s Quantitative Easing in the mid-2010s. Lower interest rates, which made equities look more favorable by comparison, helped drive stock market indices like the Dow Jones Industrial…
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The GOP’s Hail Mary Pass
Faced with a chronically slow-growth economy, expanding deficits, mounting federal debt, and a looming funding crisis for the U.S. welfare state, Republican congressmen are, to borrow a football metaphor, throwing a hail Mary pass into the end zone in the desperate hope of scoring a winning touchdown. They are gambling that tax cuts combined with…
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Northam Appoints Layne as Virginia CFO
In an important signal of how he plants to govern, Governor-elect Ralph Northam announced yesterday his appointment of Transportation Secretary Aubrey Layne as his Secretary of Finance. Layne will replace Ric Brown, who is retiring after serving three consecutive governors in the office. Layne, an administrator with a non-partisan, technocratic bent, works well with Democrats…
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Entitlements, Fiscal Limits and the Looming Age of Rage
Now that Democrats are close to parity with Republicans in the House of Delegates, there is renewed talk of Medicaid expansion in Virginia. Meanwhile, in Washington, President Trump and Republicans are pushing a tax-cut plan that would spur economic growth but, even with stronger growth, would increase deficits by $1.5 trillion over the next ten…
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Medicaid Reforms Could Save Tens of Millions
A new forecast of Virginia’s $10 billion Medicaid program supposes that the implementation of managed-care reforms will slow runaway costs, reducing growth in spending to 2.5% in the first year and 3.4% the second year, down from an 7.8% increase in the current fiscal year. While the program still will cost an additional $670.6 million…
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How Medicaid Is Cannibalizing Virginia’s Budget
Three big trends are worth noting from the Joint Legislative Audit and Review Commission 2017 state spending update, a review of state spending over the previous 10 years. First, General Fund spending has been constrained by limited revenue growth resulting from Virginia’s weak economy. The increase in spending has averaged 2.0% per year. Adjusted for…