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).

There is a solution that has been around for over 100 years… 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

  • 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……

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”

Things Can Only Get Better

That statement has been passed around elections in Mississippi for decades….the candidates are all about jobs and education and well pick a subject….we voters have been promised so much and so little has been delivered……

Most recently the Wall Street has conducted a survey of states and gave them a ranking……

24/7 Wall St. considered data from a number of sources, including Standard & Poor’s, the Bureau of Labor and Statistics, the U.S. Census Bureau, the Tax Foundation, RealtyTrac, The Federal Bureau of Investigation and the National Conference of State Legislators.

Unemployment data was taken from the U.S. Bureau of Labor Statistics. Credit ratings were from ratings agencies S&P and Moody’s. We relied on the FBI’s Uniform Crime Report for violent crime rate by state and large metropolitan areas. RealtyTrac provided foreclosure rates.

A significant amount of the data we used came from the U.S. Census Bureau’s American Community Survey. Data from ACS included percentage of residents below the poverty line, high school completion for those 25 and older, median household income, percentage of the population without health insurance and the change in median home values from 2006 to 2011. These are the values we used in our ranking.

Once we reviewed the sources and compiled the final metrics, we ranked each state based on its performance in all the categories. All data are for the full year 2011, with the exception of debt per capita, obtained from the Tax Foundation, and state budgetary data, which came from the U.S. Census Bureau, and is for fiscal year 2010. New to this year’s study was our more detailed review of state industry for 2011, from the the Bureau of Economic Analysis, exports per capita for 2011, from the Census Bureau, and the 2010 tax burden and the current tax business climate, from the Tax Foundation.

And now….may I have a drum roll please…..hoiw did the great state of Mississippi do on the rankings?

40. Mississippi
> Debt per capita: $2,182 (11th lowest)
> Budget deficit: 15.9% (tied-22nd largest)
> Unemployment: 10.7% (4th highest)
> Median household income: $36,919 (the lowest)
> Pct. below poverty line: 22.6% (the highest)

Last year, Mississippi had the nation’s lowest median income. At just under $37,000, it was more than $13,500 below the national median income. Along with that distinction, no state had a higher poverty rate than Mississippi’s 22.6%, which was double the rate of six states. Mississippi has also fallen behind the rest of the nation in recovering from the financial crisis. The state’s GDP shrank by 0.8% in 2011, the second largest decline in the country, and 10.7% of the state’s workforce was unemployed, the fourth-highest figure in the U.S. According to The Commercial Appeal, there are currently as many residents employed as in the mid-1990s, though the state’s population has risen from 2.7 million to nearly 3 million.

Th3e ONLY good news in this survey is….there are 10 states below us….which is a pretty good standing for the state….we are usually at the bottom of every good list and the top of every bad list……

When will the people of Mississippi demand their elected clowns actually do something for the people of the state and stop playing their political games?

The best answer is….I will be dead and gone before that happens!

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……

SB 2288–Speculator’s Dream

There are times when the state legislature does something that is a blatant disregard of the people it represents and SB2288 is such bill….which states:


This appears to be a boon for the purpose of land speculation….

A case could be made that land speculation is the cause of almost every major recession/depression that has occurred whether nationwide or statewide…..The 19th century economist Henry George describes it:

That land speculation is the true cause of industrial depression is, in the United States, clearly evident. In each period of industrial activity land values have steadily risen, culminating in speculation which carried them up in great jumps. This has been invariably followed by a partial cessation of production, and its correlative, a cessation of effective demand (dull trade), generally accompanied by a commercial crash; and then has succeeded a period of comparative stagnation, during which the equilibrium has been again slowly established, and the same round been run again. This relation is observable throughout the civilized world. Periods of industrial activity always culminate in a speculative advance of land values, followed by symptoms of checked production, generally shown at first by cessation of demand from the newer countries, where the advance in land values has been greatest.

This bill is just another attempt to help the land speculators while depriving the state of much needed tax revenue…in these days any reduction in revenue can only lead to a cut in needed services….

Once again, the state legislation is dealing the people of the state a bad hand, just as they do every session…the people need to stop sleeping through the day and wake up politically…they are paying these people to do nothing but screw them at every session….

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 was sarcasm)…..

The Genius Of The State Politician

For years I have been a staunch opponent of the tax breaks and tax cuts that are thrown around liberally just to gain votes….I have said that all this will come back to bite them in the butt……BAM!  The jaws are open…..

New US census data show that state and local government tax revenue continued their year-long plunge in the third quarter, falling by 7 percent from the same period last year. In response, governments are cutting spending on social programs, infrastructure and education, and are laying off or cutting the wages of government workers.

It was the fourth straight quarter in which tax receipts fell on a year-over-year basis, the Census Bureau’s Quarterly Summary of State and Local Tax Revenue shows. Collections for 2009 through the third quarter were down $76 billion, or 8 percent, from a year ago, while federal tax revenue fell even more sharply in the same period, by 19 percent.

Every major form of state and local tax revenue declined. Totals for sales and personal income taxes fell by 9 percent and 12 percent, respectively. The erosion of these two taxes, on which state governments rely, is owed largely to unemployment and wage cuts.

Taxes on business profits fell precipitously, by 18 percent in the third quarter, year-over-year.

Property tax collections actually increased by 3.6 percent in the third quarter of 2009 from 2008. However, analysts explain that government property assessments have simply not yet caught up with market-determined home and commercial real estate values. This gap is expected to begin to be bridged in 2010, imperiling municipal and county governments heavily reliant on property taxes.

According to a study by the National Conference of State Legislators (NCSL), states cut nearly $150 billion in spending to balance budgets in the current fiscal year. But already, 36 states have seen gaps reopen to a combined deficit of $28.2 billion. These deficits will worsen. In 2011, 35 states making estimates predict a combined deficit of $55.5 billion. In 2012, just 23 states offering data already estimate red ink totaling $68.8 billion.

No state has been spared from falling revenues. Energy-rich states that averted budget crises last year were hit particularly hard by third-quarter revenue declines, among them Texas, Oklahoma, Wyoming, North Dakota and Alaska. The latter, with a 65 percent decline, experienced the biggest year-over-year dropoff. In all, 22 states, including Illinois, saw a third-quarter revenue decline greater than 10 percent.

These shortfalls will inevitably lead to more cuts in social spending and further layoffs, wage cuts and furloughs for state workers. Layoffs of government workers could produce the next wave of unemployment in the US, where fully 15 percent of the non-agricultural workforce is employed by state or local governments.

Sounds like a crisis coming, huh?  They were warned……they will not get much help from the federal government either…….and who will suffer the most?  The poor and the middle class….that is who…and yet they will help return the same batch of idiots to power at every vote…… wait there is a saying that describes this phenom…….”Stupidity is doing the same thing over and over and expecting a different outcome”……

Sorry people, but the only way that services can be provided to the people is with revenue and revenue comes from taxes…….sorry, it is just that simple…….if you want the services for your family then tell the politicians they need to find a more equitable way of taxation…….May I suggest Land Value Taxation (LVT)……it is worth a look…..that is if you truly care about the people you represent……but that may be a bit much to ask of you guys……

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!

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.

Do Not Give Mississippi Ideas

Gov. Arnold Schwarzenegger’s finance officials, faced with a growing budget gap, Thursday unveiled more ways to cut spending by doing away with a popular health care program for children, welfare payments to poor families and grants to university students.

That is the plan to cover a California budgetary shortfall.  After reading that I thought…Damn!…please do not give Barbour any ideas on new ways to screw the poor in Mississippi.

The recession is bad and the poor suffer more than others especially at the hands of state government.  Always the programs for the poor take the biggest hits, and the corporations get yet more tax cuts on the hope that it will stimulate the economy.  So far that has been a bust but no new tact is considered.

Eventually Mississippi will get out of the tax cuts for the rich and taxes for the workers mentality, but until then……workers continue to suffer at the hands of their state government.

States Suffer, Wall Street Parties

The Center on Budget and Policy Priorities (CBPP) reported last month that 47 states are facing budget shortfalls. The CBPP has called it “a fiscal crisis of historic proportions.”

Investigating the extent to which the economic crisis and its impact on state budgets has forced new hardships on the most vulnerable members of the population, the CBPP has reported that “At least 40 states have cut a range of services, including those aimed at some of their most vulnerable residents.”

The list of cuts is staggering, The CBPP writes that “At least 18 states have enacted or implemented cuts that will affect low-income families’ eligibility for health insurance or reduce their access to health care; at least 18 states and Washington, D.C. are cutting medical, rehabilitative, home care, or other services needed by low-income people who are elderly or have disabilities; at least 21 states are cutting K-12 and early education; and at least 28 states have implemented cuts to public colleges and universities. Also, at least 37 states and Washington, D.C. have proposed or implemented cuts to their state workforce.”

In an effort to balance budgets, state governments have started laying off state workers, including those responsible for evaluating and approving disability claims. Social Security Commissioner Michael J. Astrue acknowledged that the decision to lay off state workers responsible for disability claims was “completely illogical,” pointing out that states ultimately do not save any money. The federal government, he said, reimburses states for the cost of any disability benefits paid out as well as the salaries of those workers overseeing such decisions. The decision to dismiss workers in this field is particularly destructive due to a recent increase in requests for disability benefits.

Leaders in state government continually point to federal stimulus money as a means of coping with such difficulties. However, the funding guaranteed by the federal government is woefully inadequate for confronting the crisis at hand. The CBPP estimates that only 40 percent of the shortfall in state budgets across the US could be filled by federal aid.

Things could not be more clear. While no expense can be spared to bail out the Wall Street elite and financial speculators who have contributed to the crisis currently leading the world into an economic catastrophe, the working class is being forced to accept the most drastic assaults on their living standards and basic necessities.