The State And Local Crisis

The pandemic has caused so many problems for state and local governments…..the  biggest problem is yet to come.

The budgets and and revenues will be a insurmountable problem that needs a solution that will benefit everyone and crap on none.

US local and state governments are reopening the economy as the pandemic continues to spread, although mass testing for COVID-19 and contact tracing programs are absent. At the same time, new state and local budget projections for the coming fiscal year paint an even grimmer picture than what was expected at the beginning of the month.

The Center on Budget Policy and Priorities (CBPP) has reported a 25 percent decline in revenues for some states in April alone. The CBPP now predicts that US state budget shortfalls will reach $765 billion over the next three years due to the economic impact of the COVID-19 pandemic. The report points out the strong relationship between unemployment rates and shortfalls in state budgets, which are critical for providing health care, housing, education, infrastructure and social welfare programs.

According to CBPP, several states have already predicted major reductions in revenue for 2020, including Massachusetts ($4.5 billion, or 15 percent of the state budget); Michigan ($3.2 billion, or 13 percent); and Utah ($1.4 billion, or 18 percent). For the next two years, some states are projecting even steeper drops, such as California ($32 billion in 2021, or 21 percent of its state budget); New York state ($12 billion in 2021 and $16 billion in 2022, or 14 and 17 percent of its annual budget); and Colorado ($3.2 billion in 2021 and $4 billion in 2022, 24 and 17 percent of its annual budgets, respectively).

https://www.wsws.org/en/articles/2020/05/27/budg-m27.html

There is a solution that has been around for over 100 years…..it is called Land Value Tax….

Land Value Taxation is a method of raising public revenue by means of an annual charge on the rental value of land. If you do not want to read through this text, you can watch this ten minute video by Dominic Frisby.

The below advantages are  from http://www.landvaluetax.org/

  • A NATURAL SOURCE OF PUBLIC REVENUE. All land makes its full contribution to the Exchequer, allowing reductions in existing taxes on labour and enterprise.
  • A STRONGER ECONOMY. If we tax labour, buildings or machinery and plant, we discourage people from constructive and beneficial activities and penalise enterprise and efficiency. The reverse is the case with a tax on land values, which is payable regardless of whether or how well the land is actually used. It is a payment, based on current market value, for the exclusive occupation of a piece of land. In the longer term, this fundamentally new and different approach to revenue raising will stimulate new business and new employment, reducing the need for costly government welfare.
  • MARGINAL AREAS REVITALISED. Economic actitivities are handicapped by distance from the major centres of population. Conventional taxes such as VAT and those on transport fuels cause particular damage to the remoter areas of the country. Land Value Tax, by definition, bears lightly or not at all where land has little or no value, thereby stimulating economic activity away from the centre – it creates what are in effect tax havens exactly where they are most needed.
  • A MORE EFFICIENT LAND MARKET. The necessity to pay the tax obliges landowners to develop vacant and under-used land properly or to make way for others who will.
  • LESS URBAN SPRAWL. Land Value Taxation deters speculative land holding. Thus dilapidated inner-city areas are returned to good use, reducing the pressure for building on green-field sites.
  • LESS BUREAUCRACY. The complexities of Income Tax, Inheritance Tax, Capital Gains Tax and VAT are well known. By contrast, Land Value Tax is straightforward. Once the system has settled down, landholders will not be faced with complicated forms and demands for information. Revaluation will become relatively simple.
  • NO AVOIDANCE OR EVASION. Land cannot be hidden, removed to a tax haven or concealed in an electronic data system.
  • AN END TO BOOM-SLUMP CYCLES. Speculation in land value – frequently misrepresented and disguised as “property” or “asset” speculation – is the root cause of unsustainable booms which result periodically in damaging corrective slumps. Land Value Taxation, fully and properly applied, knocks the speculative element out of land pricing.
  • IMPOSSIBLE TO PASS ON IN HIGHER PRICES, LOWER WAGES OR HIGHER RENTS. Competition makes it impossible for a business producing goods on a valuable site to charge more per item than one producing similar goods on less valuable land – after all, producers and traders at different locations are paying different rents to landlords now, yet like goods generally sell for much the same price and employers pay their workers comparable wages. The tax cannot be passed on to a tenant who is already paying the full market rent.

I wrote about this here on GSFP……https://gulfsouthfreepress.wordpress.com/land-value-taxation/

This will be hard to convince the politicians of this….but as they struggle to balance the budgets this will be a good solution ….but will legal bribes prevent a solution?

I Read, I Write, You Know

“lego ergo scribo”

New Ideas Of State Reps

I got this email recently from the Progressive States Network and thought I would pass it along to the readers….some of the ideas are pretty good and innovative and some are just dumb….

Job Creation Opportunities During a Recession

Kauffman Foundation – The Economic Future Just Happened
Information Technology and Innovation Foundation – 2008 State New Economy Index
Kauffman Foundation – Better, Faster, Cheaper: The New Bootstrap Job Creator”

State Venture Capital Funds

National Governors Association – State Strategies to Promote Angel Investment for Economic Growth
NASVF – U.S. State-Supported Venture Capital Funds

Encourage Technology Transfer and Commercialization

Pennsylvania Economy League – A Continuing Record of Achievement: The Economic Impact of Ben Franklin Technology Partners 2002-2006
U.S. Department of Commerce, Economic Development Administration – Construction Grants Program Impact Assessment Report
Information Technology and Innovation Foundation – 2008 State New Economy Index
Batelle and the Association of University Research Parks – Characteristics and Trends in North American Research Parks

Strengthen Industry Partnerships & Clusters

Keystone Research Center – Pennsylvania’s Industry Partnership Strategy
Steel Valley Authority (SVA) – Early Warning and Layoff Aversio
Seattle Foundation and SkillUp Washington –  Creating Stronger Workforce Partnerships In Manufacturing
National Fund for Workforce Solutions – The Principles of the National Fund for Workforce Solutions and Their Implications for Public Policy
National Governors Association – Cluster-Based Strategies for Growing State Economies

State government needs all the help it can get….but unfortunately politics is NOT always the best for the state…just the individuals that play the game……

Fixing Mississippi’s Economy

State after state after state is reeling from the results of the recession……mostly because they have cut taxes to the bone….a promise to get elected……and now the revenues are NOT there……almost all are scrambling to find money for the few services left in the state’s budget….

A report in the Clarion-Ledger:

With the economy continuing to deplete tax revenues, Gov. Haley Barbour said the state is considering some kind of credit assistance that would help small businesses without duplicating programs offered by banks and other agencies.

As the governor and others talked about how the lack of credit is forcing some businesses to close, Jerry Host, president and chief operating officer of Trustmark National Bank, reminded those gathered that the country’s economic problem is complex and needs a multi-faceted solution. Just as other businesses have not gotten expected contracts, Host said banks also are missing anticipated income because businesses have canceled expansions that would have required loans.”The return of a healthy economy is not just dependent on bank lending, it requires the recovery of consumer spending, which in turn increases revenues and leads to healthier businesses – large and small,” Host said in an e-mailed statement sent after the meeting.

The governor repeated his commitment to attracting new jobs as another method of replenishing lost taxes.

Okay there is just so much wrong with this whole approach……first, cutting taxes to be elected is why the state is suffering with low income….second, the state is notoriously always the worst state for employment….none of these “job creation” schemes has panned out in the past…..why would it in the middle of a recession?…….third, “replenishing taxes” cannot be done by cutting more taxes or giving more tax breaks….I have said the demand is the answer liquidity means NOTHING to anyone…..

One question….why are churches tax exempt?  Sorry…I digress…..may I suggest that a new way of thinking about taxes should be considered……why not try Land Value Taxation (LVT)?…….this would be a good way to generate new taxes and if done corrctly all other taxes could possibly be eliminated……

But sadly….NO one in Jackson has the guts let alone the cajones to even consider this…their longevity in the legislature could be in jeopardy…God knows we cannot live without their worthless, do nothing butts…..(in case you missed it..it was sarcasm)…..

Whose Idea Is It?

We all have heard the stories of how the state is suffering from this recession….that the revenues of the state are reaching record lows….sad to say we are not alone…..all states are suffering from the same problems in their budgets….but I will focus on Mississippi…..

I keep bring up that fact that the state’s revenue comes from the imposition of taxes….without taxes there is NO services that the state is required to offer the people…..and yet every time the legislature meets there is some that want, including the governor, to cut taxes, almost ALL taxes…..do they NOT see what that does for their budgets…..or is it they do not care and need the cuts to pad their political resumes for their next campaign?  IMO, it is the latter!

Property taxes?  And sales taxes?  You do realize that this is the most important tax?  Why?  The collection of property taxes is one of the chief sources of revenue for state and local government and then the collection of state sales tax……and now the new legislative session has a couple of bills before it:

First there is SB 2288 which states:

AN ACT TO AUTHORIZE THE BOARD OF SUPERVISORS OF A COUNTY AND/OR THE GOVERNING AUTHORITIES OF A MUNICIPALITY TO GRANT A PARTIAL AD VALOREM TAX EXEMPTION FOR AGRICULTURAL PROPERTY THAT IS BEING CONVERTED TO A RESIDENTIAL USE

And then there is HB 4 which states:

AN ACT TO AMEND SECTION 27-65-17, MISSISSIPPI CODE OF 1972, TO REDUCE THE SALES TAX RATE ON RETAIL SALES OF MOTORCYCLES FROM SEVEN PERCENT TO FIVE PERCENT;

Just those two bills would decrease the amount of revenue that is coming in…,…state legislators will have to deal with the budget shortfalls by cutting the services and programs that it funds….you have that right?……first, programs for the poor and disadvantage will suffer, i.e.  Medicaid and then once that sector is officially killed they will move to such other programs as educational and so forth……all that is just fine for some but they have NOT looked at it realistic……once all the other programs have been cut to the bone and there is still a shortfall then cuts will be made to programs that effect the white people the most….like fire and police….and then the voice of the people will be heard at least if the politicians want to be re-elected……

But will the people finally realize that to keep cutting taxes is NOT the way to fund programs that benefit ALL Mississippians?

To answer my own question….maybe finally the people of Mississippi will be open to the idea of land value taxation (LVT)…….this could go a long way to solving ALL of Mississippi’s financial problems….it is worth a look…so why waste time BS-ing the people and find the cure…it is there just grow a set of cajones and try it…..it could not be as bad as the crap you put us through yearly…..Just a thought…..

What Of Gulfport?

Gulfport’s new mayor is sworn in and the promises have begun…the new mayor got elected because he was doing it for Gulfport.

Schloegel outlined the main goals in a new strategic plan they developed: Enhance revenue through economic development, with a city emphasis on retail expansion; work with the state port and state Transportation Department to plan a transportation corridor that will meet the needs of port expansion; tap a variety of programs to help residents rehabilitate substandard housing; improve infrastructure, from roads to playgrounds; build on the momentum that has led to superior fire and police service; and achieve a new standard in early childhood education.

During his first few months in office, Schloegel will lead the city’s economic development effort. He said a hiring freeze will temporarily prevent replacement of the director who recently resigned. When the position is filled, he will look for a director with experience in retail development. He said the Harrison County Development Commission and Mississippi Development Authority do a good job of focusing on industrial development.

Declining revenue will make any program he may want to start difficult…..my question is will he find new ways of increasing the city coffers or will he be giving away the city in the name of progress?

In the past, too many mayors have given away the school and killed the children (a metaphor, I think).  They have given tax breaks where tax breaks hurt the city and then the workers pay the price….companies get the gold…workers get the shaft.

Will our new mayor be good for the city or will he just be worried about the next election?

The Mississippi Budget

The state legislature ended the regular session in early April, they came back in early May, recessed and now are back to see just how the Fed Stim cash will help the budget.

Forbes magazine is reporting:

Mississippi lawmakers said they did the opposite of what they intended Thursday as House and Senate negotiators moved farther apart, rather than closer together, in their budget talks.

Republican Gov. Haley Barbour has urged legislators to be cautious because the recession has caused a decline in state tax collections.  (Yes it has and thanx to Barbour’s BS of giving away everything to corporations.  If you want someone to thank then send Barbour a note.)

The session is now scheduled to end next Wednesday. If the budget is still not done by then, it would take a two-thirds vote of the House and Senate to extend the session to allow more time for talks.

You would think that people that are suppose to be our leaders would show some cajones and tell the residents the truth…..that is that they will most likely have to pay higher taxes if they want state programs to continue.

That is a pipedream on my part…they guys and gals that I speak of are cowards and will do nothing that can be used against them in their re-election bid.  The state’s poor will suffer…the state’s workers will suffer…….and still nothing will get accomplished….AS USUAL!

Could This Be Mississippi’s Future?

All state’s are facing some critical decsions on their budgets and their shortfalls.  As always it is the poor and the elderly that will pay for the problems.  California’s new plan may become a template for other states, and especially Mississippi.  Why?

Mississippi has a large poor community and the programs that are earmarked for them are a huge drain on the state budget, at least according to the politicians.

But the Gov-in-ator has found a new way to deal wuith his budgetary problems.

Proposals to eliminate insurance for needy children, reduce Medi-Cal services for the poor and scale back assistance to the unemployed would choke off millions of dollars to Santa Cruz County and cripple access to health care and other critical services for thousands locally, advocates say.

In addition to the $248 million hit for Healthy Families, the governor has proposed a savings of $34 million in Medi-Cal expenses by eliminating breast and cervical cancer treatment for women over 65 and cutting all non-emergency health care for undocumented residents. The governor also is calling for $92 million of Medi-Cal savings by scaling back treatment and drug options for the mentally ill.

Here are the proposed cuts–it will be interesting to watch the Mississippi side of this to see if any ideas were gleemed from California.


The governor’s plans to reduce the state’s budget shortfall call for big hits to health programs. Among them:

Elimination of Healthy Families Programs ($248 million savings)

Reductions for Medi-Cal mental health programs ($92 million savings)

Elimination of Medi-Cal breast and cervical cancer treatment and non-emergency care for undocumented ($34 million)

Cuts to HIV/AIDS programs ($56 million savings)

Cuts to primary care services in rural areas ($34 million savings)

Reductions to maternal health programs ($10 million savings)

Reductions to CalWORKs programs ($1.3 billion savings)

The poor is being attacked, but what will the wealthy be asked to contribute?

It’s Medicaid Again!

All the cig smokers have been targeted in the past as the “sole” financiers of the medicaid program…..but all the taxes imposed on tobacco uses has done NOTHING to help the system at all.  And now the gov wants a tax on hospitals to help cover the program shortfall.

Barbour has pushed the proposed hospital tax as a way to fix a shortfall in the state’s Medicaid budget, but Democrats and the Mississippi Hospital Association have opposed it. Without the tax, Barbour has warned of severe cuts affecting vital state services.

Barbour has said he is asking hospitals to pay their “fair share,” but opponents have said the cost would be passed down to paying patients and have tarred the idea as a tax on the sick.

Brown said the House has agreed to a $60 million hospital tax – an increase over the MHA’s drop-dead figure of $45 million – but the tax would have to come with an agreement that Medicaid reimbursement rates would be frozen.

This all is so damn silly!  The state keeps raising taxes, some of them hidden, to pay for Medicaid abnd turn around and give away millions and in some cases billions to corporations…..why?  Let me guess…as an incentive to buil;d in the state, right?

That is silly too!  The way labor is suppressed in the state is enough to make it attractive without all the tax incentives.

Eventually, someone will realize that taxes MUST be paid if the state is to operate and that all concerned, including the corporations, which pay little as it is now, has got to be involved.  The people of Mississippi are asked to do MORE than their part while the vultures in government and business reap the benefits.

Where Is The Logic?

I recently read a copy of the budget report by the Mississippi Economic Policy Center which has been sent to the governor and the legislation, which recommends that there be a cut of 4% in the budget of the Attorny General’s office.  It is not the only cut that it recommended but for the sake of this post it is the most important.

Recently in the Mississippi House of Representatives bill number HB 351 was eneter into consideration by state Rep. Watson which calls for the creation of a division for civil rights investigations.  Personal I think this is a hell of an idea and will mostly likely give it thumbs up.  I will agree that this state needs something along these lines there are way too many questions than answers in some of the cases.

But wait!  The recommendation was sent out in Nov 0f 08 and the legislature went into session in Jan of 09 and they will mostly likely cut the budget of the AG office.  Then why would you introduce a bill to expand the office knowing that it will go nowhere?

Good question, right?

My answers are.  1–Watson did not read the report that was sent to him or 2–it is political theater that he can use at election time or 3–just a waste of time or finally 4– a combination of all 3.

Our state legislature spends approximately 90 days in session and they waste about 30 of those days doing stuff that waste time, energy and money and in the end they get little accomplished and must return for special sessions time and time again.

Maybe we as voters of this state should consider changing the system abit and go to a unicameral system, of some sort—it would have to be cheaper and more efficient IMO.

Help Those Of Priviledge

Tax deductions are a wonderful thing, right?  Oh yeah, but when those deductions take much needed money away from the state when it is in its budgetary problems is just plain ignorant.  And ignorant is just what the proposed bill, HB 631, is….to say the least.

Let me see, the big hits the state budget will take will be in medicaid and education, is that about right?  And this bill will take away even more funds that are needed.  You people are just pathetic.

Okay, want more?  There is another bill, HB 670 that would allow home schooled kids to participate in public school extracurricular activities.  How nice, again……if the schools are not good enough for some children, why would we want them participating in other public school activities?  And yet another way to siphon more money out of the education budget.

But wait there is even more……HB 721 will exempt gold, silver and other precious metals from sales tax…now who buys most of the gold and such?  If you are wealthy then the state has your back…if you are poor…the state wants to give you a good screwing.

If you can afford to buy luxury items like gold silver, pay for priuvate scholl etc….then you will get all the tax breaks….but if you are a struggling family in the middle class then bend over the state is coming to call.