Public Money

The Costly Double Whammy of Aging

For years, we’ve been warned of the profound effect America’s rapidly aging population will have on our services. But there are two areas in particular where an aging population poses the largest threat to the fiscal future of states and localities: health-care costs and tax subsidies.

Let’s start with health-care costs, specifically the increasing costs of providing Medicaid coverage for an expanding population of elderly people in need of long-term care. Baby boomers born between 1946 and 1964 are more likely to live longer and exhaust their resources than previous generations. By 2050, when the youngest boomers will be in their 80s, long-term care for the elderly will devour roughly 3 percent of the U.S. economy, up from 1.3 percent in 2010, according to the Congressional Budget Office. READ MORE

The ‘New Neutral’ Is Here

The great philosopher-turned-catcher Yogi Berra once said, “It’s tough to make predictions, especially about the future.” Apparently he knew finance like he knew baseball. This past decade we’ve seen a parade of financial developments that few people predicted, starting with a real estate crisis and continuing through today’s sluggish and uneven economic recovery.

Even when financial soothsayers are wrong about the future, they force us to think about why it will look the way it will. In other words, they challenge the conventional wisdom. A recent financial prediction -- known as “the new neutral” -- is no exception. READ MORE

The Unforeseen Fiscal Challenges of Uber-Like Services

The explosion of sharing or on-demand services like Uber and Airbnb is the beginning of an economic upheaval every bit as significant as the industrial revolution. The on-demand economy promises to radically reshape the cost of services and change the face of the workforce. These upheavals, in turn, are altering state and local government policies -- imposing unforeseen fiscal risks.

One of the fallouts, for instance, is an upsurge in the growth of temporary or part-time workers, such as Uber drivers, Airbnb hosts and Axiom Law attorneys. These workers are providing on-demand services at rock bottom prices. They are not working in downtown or suburban office buildings or for traditional employers, nor are they eligible for traditional health-care or pension benefits. The challenges for states and localities, therefore, will be how, in light of these changes, they adjust tax policies, revise regulations for zoning and public safety, and provide retirement benefits.  READ MORE

The ABCs of Cost Accountability

There’s an old adage: Politicians are all for efficiency, but only for programs they don’t like. That’s why asking if a program is cost-effective is usually a political nonstarter.

But sometimes what stuff costs becomes a hot political question. In fact, we’ve seen a predictable pattern since the mid-1980s: The economy starts to bounce back from the most recent recession; state and local leaders recall the dreadfully blunt ways in which they cut their budgets during that recession; and they vow that if they ever have to do it again, they’ll get the right information to whittle down spending in a strategic, focused way. Around this time they start to hear about an accounting method known as activity-based costing (ABC) that can solve this problem. READ MORE

Ebola Scare Highlights the Uncertain Costs of a Pandemic

With the arrival of Ebola in the U.S. came public fear, widespread misinformation, and the ever-present danger of contamination and contagion. While the cases have been isolated, the threat of the virus required state and local leaders to assume unprecedented leadership and extreme diplomacy in dealing with the public, the medical community, and even medical suppliers and contractors, who balked at handling blood samples, soiled linens and hospital waste out of fear of the virus.

But when a virus like Ebola hits a jurisdiction, there is a hefty fiscal price as well. In Texas, Dallas County was the first U.S. locality to deal with the sudden challenge of an outbreak. The impact on the budget was not inconsequential. It cost the county a quarter of a million dollars to gut and decontaminate the one small apartment of the nation’s first Ebola victim, Thomas Eric Duncan -- part of the approximately $1 million the county expended in the first weeks of the crisis. READ MORE