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Taxing and Spending

Covering topics such as bonds, cryptocurrency, federal aid and pensions.

A new book by Yale law professor David Schleicher explores the benefits and drawbacks of various responses to state and local debt crises. It’s a trilemma that leaders will face again and again, Schleicher says.
As legislators contemplate the two-year, $50 billion budget, nonprofit leaders are advocating for a 9 percent increase in funding, claiming their increases have been far below inflation over the last 10 years.
The Democrat-controlled Senate approved the budget with a 34-22 vote on Thursday evening, which will allocate an additional $100 million to higher ed, $85 million for homelessness and $200 million toward pension plans.
While some have predicted economic returns of $150 million or more, economists predict that those numbers are inflated. Last time the Democratic National Convention came to Chicago, the city spent $60 million to prep for the event.
A debt-ceiling breach would cost states in terms of revenue, pension investment losses and increased borrowing costs. Even a fix at this point will likely lead to cuts in federal grants.
State lawmakers are considering legislation that would reallocate hundreds of millions of dollars from K-12 and higher education into a new savings account and would cap future education budget increases to no more than 5 percent.
Revenues are slowing but lawmakers, at least in red states, have continued to enact major tax cuts this year.
Income tax and sales tax revenue projections are slipping. State and local policymakers need to avoid fiscal giveaways and gimmicks, and they need to beware of potential federal aid clawbacks.
Northeastern New Mexico received federal funds to develop rural maternity care networks of hospitals and clinics, which has since helped more than 760 mothers. But the program’s funding will run out in August.
The Department of Lands has signed an agreement with federal and tribal partners making the state more responsible for wildland-urban interface areas, which are known to attract costly wildfires and have little building regulations.
Congress has authorized billions, but there’s a problem: New infrastructure planning frequently relies on historical flood patterns for its benchmarks rather than forecasts of changing risks as the climate warms.
The state Senate passed a bill that would allocate millions more for public school funding annually, sending the legislation to the House for review with less than one week before the end of session.
The Safe Streets and Roads for All program, which provides direct funding to cities to make street improvements, is accepting applications. Other grants for transportation infrastructure are open or opening soon as well.
State and local financiers now face interest rate markets that anticipate decelerating inflation and a weaker economy. Public treasurers and debt managers need fresh ideas, agility and prudent strategies.
The program that provides state-funded health insurance to adult undocumented immigrants was first estimated to cost $220 million. But three months later, that price tag has ballooned, complicating the state’s budget debates.
The state’s attorney general is pressing lawmakers to pass legislation that reduces potential conflicts of interest, requires more public reporting and improves protections for investors within the cryptocurrency industry.