The Williams Report: October 2018, Part 2
As budget hearings begin, Arkansas legislators will learn the details of programmatic and state agency funding needs, and what Governor Asa Hutchinson wishes to propose for tax reform this coming legislative session.
Governor Jay Carney received the second-lowest possible score on the popular measure of governors’ tax-and-spend records. Governor Carney’s poor performance indicates policy decisions in favor of high tax rates and large proposed budgets.
A new report from the Illinois Policy Center uncovered $54.2 million in wasteful spending and $27 million in pork-barrel spending coming out of Springfield. Improvements on privately-held assets, appropriations for art programs, and incentives for bike-riding make up much of this spending.
Public Question No. 1 is an initiative requiring the legislature to adopt a balanced budget unless two-thirds of both chambers vote to suspend the requirement. Representative Todd Huston, the resolution sponsor, says the amendment should be approved to “limit the amount of gimmicks that can be played” with the state budget.
Comptroller Thomas Shack likens getting the legislature to pass a supplemental budget by the statutory deadline of August 31st to being the “chirping smoke detector.” Now that the legislature has failed to meet the deadline, Comptroller Shack’s team will likely fail to meet their reporting deadline of October 31st.
Expiring taxes on healthcare providers, a major revenue source for state public health programs, have arisen as a major campaign issue. With the new state budget for healthcare exceeding $2 billion, the provider tax looms large as it brings in more than $500 million in state revenue
Concerned about sudden hikes in state property taxes following the McCleary school funding case, Superintendent of Public Instruction Chris Reykdal wishes to finance increased school funding with a capital gains tax, estimated to cost taxpayers more than $2 billion.
The board of San Francisco Employees’ Retirement System (SFERS) announced they are divesting from five major oil and gas companies unless the companies meet their demands. The $25.5 billion pension fund is one of the largest public plans to practice political divestment strategies. ALEC’s Keeping the Promise report found that prioritizing politics over better returns is the opposite of fiduciary responsibility.
State Representative Knute Buehler and Governor Kate Brown found another area of sharp disagreement on how to address the state pension crisis. Representative Buehler advocated for transitioning state employees to a defined-contribution 401(k) plan. Governor Brown said state employees need to pay some of their own pension costs but didn’t specify how or how much.
Kentucky, a state with one of the lowest public pension funding ratios in the country, passed pension reform in 2018, which moved new teachers to a more sustainable hybrid plan. However, SB 151 is being challenged before the Kentucky Supreme Court.
Despite closing a significant budget hole and actually collecting a revenue surplus, Louisiana’s continued pension crisis looms over future state budgeting. Including all unfunded retirement obligations, Louisiana’s debt burden of $19.7 billion saddles each citizen with $15,500 in debt.