The Week in Public Finance: Remembering Menino, Tax Friendliness and Rocking the Vote
A roundup of money (and other) news governments can use.
More Boston than Paul Revere
A slight departure for a moment as we pause to remember former Boston Mayor Thomas Menino, who died last week on October 30 at age 71. Boston’s longest-serving mayor, Menino was an icon to many Bostonians as he’s credited with helped turn Boston into a hub of 21st-century innovation by recruiting high-tech companies and giving the city’s massive waterfront an identity. For all the adulation Menino received, he loved Boston right back. After the Boston Marathon bombing in April 2013, for instance, Menino demanded to be discharged from the hospital where he was recovering from a bad fall. He refused pain killers in the days ahead because he wanted a clear head to guide his city through the devastating attack. Shortly after leaving office this year, Menino was diagnosed with cancer.
Governing staff covered Menino's career extensively. Most recently, Executive Editor Zach Patton followed him around Boston for a day and wrote this profile about Menino’s ability to be a big picture and a details guy all at the same time. Contributor Rob Gurwitt wrote this piece about Menino’s focus on the importance of Main Streets in neighborhoods and also wrote his profile in 2001 when Governing honored Menino with its Public Official of the Year award. Stephen Goldsmith, a contributor, wrote in 2008 about Menino’s creating affordable housing in Boston and in 2012, called him an old school mayor who’s on the forefront of innovation. It's only a small sample, but it gives an idea of the very permanent mark Menino leaves not just on Boston, but in local government as a whole.
What we pay for a civilized society
The Tax Foundation released its annual State Business Tax Climate survey, which ranks the states based on state’s overall so-called tax friendliness toward businesses. The best and worst states remained unchanged from last year: Wyoming ranked No. 1, followed by South Dakota, Nevada, Alaska and Florida. Not surprisingly, all these states forgo a major tax. Sitting at the bottom of the list is New Jersey, which the foundation has ranked 50th for three of the past four years. New York (49), California (48), Minnesota (47) and Vermont (46), round out the bottom five
But here’s something that’s a big change: North Carolina improved dramatically from 44th place last year to 16th place this year, the single largest rank jump in the history of the index. The jump is due to a big tax reform package that the state is phasing in. North Carolina’s largest improvement was in the individual income tax component section: the old, multi-bracketed system with a top rate of 7.75 percent is now a flat tax of 5.8 percent and includes a generous standard deduction of $7,500. As the reform package continues to phase in, the state is projected to continue climbing the rankings.
Rock the vote?
In two separate analyses, Fitch Ratings has concluded that the outcomes of 36 gubernatorial elections and a multitude of state ballot measures are not expected to affect state ratings….unless your state is California. Voter initiatives in this week's election could have an impact on the Golden State’s budget, water credits and school districts, Fitch said. In particular, Proposition 2 (the Rainy Day Budget Stabilization Fund Act) “could help smooth the volatile tax revenues that have dogged the state budget in recent years” and institutionalize regular savings practices. But there is a negative – the proposal could hurt school districts’ savings flexibility by establishing a new schools reserve fund and setting restrictive funding preconditions “likely to render deposits to that reserve infrequent,” Fitch said.
In addition, Proposition 1, the Water Quality, Supply and Infrastructure Improvement Act of 2014, “would be generally positive for the state's water credits in the long run as it would incentivize increased investment in capital projects that improve the long-term reliability of California water supplies,” the analysis concluded. In a separate analysis, Fitch said it did not expect this year’s gubernatorial elections and most of the remaining 156 state ballot measures to have a direct effect on state ratings, “given the scope of state government and its general stability.”