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States' Dependence on Federal Spending: Historically High
Whenever the national economy takes a turn for the worse, states' tax revenues tend to fall, and policymakers at the federal and state levels often try to fill the budgetary gaps with an influx of federal tax dollars. These sorts of "stimulus" measures are pitched as ways to keep important public services operating until the economy recovers. In 2009, the President's signature stimulus bill -- the American Recovery and Reinvestment Act (ARRA) -- pumped massive amounts of public dollars into states' coffers, which went towards infrastructure construction, teacher and emergency personnel payrolls, and other projects.
This budgetary trick isn't new. What is unique when it comes to states' budgets in recent years, however, is just how much they depend on federal funding. According to new research from the Pew Charitable Trusts' Fiscal Federalism Initiative, more than 1 out of every 3 dollars states spend comes from a federal fund or grant. Even in past recessions -- indicated by the grey shading in the chart below -- that ratio tended to hover closer to 1:4.
Source: Pew Charitable Trusts
In the wake of sequestration, these findings mean that some states will undoubtedly be sitting a little closer to the edges of their seats as Congress begins another round of contentious debate on the budget and how it might avoid a government shutdown. States in the national capital region such as Maryland and Virginia will obviously be affected by any reduction in federal spending: more than 20 percent of the area's GDP consists of federal spending.
However, there are also some states that are more geographically removed from Washington but still have plenty of skin in the game -- in Kentucky and New Mexico, 35 percent of GDP comes in the form of federal spending, and there are 6 states total that depend on D.C. for more than 30 percent of their economic productivity. The Washington Post has a helpful breakdown of some of these figures here.
There are some signs of improvement: as the economy (slowly) recovers, states' tax revenues have steadily begun to increase. However, economists seem to agree that those numbers are heavily influenced by higher tax rates overall, such as recent rate increases in California.
For more on Pew's study, including plenty of helpful charts and deeper statistics, take a look at their Fiscal Federalism Initiative here.0 Comments | Post a Comment | Sign up for NTU Action Alerts
Today’s Taxpayer News!
Not so Affordable Care Act: A new report by CMS says that Obamacare will increase overall healthcare spending by a whopping $621 billion, a cost taxpayers will have to front. Read more at Heritage.
Ineligible receivers: An audit of Tennessee’s state health plan shows taxpayers lost $1.5 million due to officials failing to recognize a number of ineligible citizens who are participating in the program. Watchdog.org has more.
To the dogs: The city of Nashville has spent $30,000 on waste bags for dog refuse. Although, the metro area is attempting to find more cost effective solutions. Find out the details at Fox17.0 Comments | Post a Comment | Sign up for NTU Action Alerts
As the deadline for many of the requirements in the Patient Protection and Affordable Care Act (ACA) approaches, new reports of unforeseen costs and regulatory complexities have come to light with seemingly increasing frequency. As Congress debates key provisions of the budget, many have called for a full or partial repeal of the ACA, and the White House itself recently delayed requirements for companies with more than 50 full-time employees to offer health coverage (or contribute to insurance exchange funds).
In this week's edition of the Taxpayer's Tab, NTUF examined a bill by Congressman Todd Young (R-IN) and Senator Daniel Coats (R-IN) that would affirm the White House's decision as law, as well as delay the Act's individual mandate for another year. The legislators' bills -- H.R. 2668 & S. 1488, respectively -- would postpone outlays scheduled to go towards new Medicaid funding, health exchange subsidies, and other administrative measures that the Congressional Budget Office estimated would amount to $28 billion in savings over the 2014-2018 timeframe.
Also featured this week:
Today’s Taxpayer News!
Fisker fail: The Department of Energy announced that it will auction off its remaining loan to the now closed electric vehicle manufacturer Fisker Automotive. The outstanding loan totals $168 million. This is the second DOE backed company to go bust. Read more in the Detroit News.
Metro malaise: The Washington DC metro system, which is already subsidized by the taxpayers, is in the process of building another line which will likely increase the per-trip cost for riders significantly, while “leaving riders and taxpayers around the region to pay the bill.” Read more in the Washington City Paper.
Food stamp fraud: A federal indictment was handed down against 10 Baltimore area business owners after they allegedly used food stamp debit cards to defraud the taxpayers. The fraud totaled nearly $7 million. Read more details in The Baltimore Sun.0 Comments | Post a Comment | Sign up for NTU Action Alerts
Seven Sound Principles for Internet Sales Taxation
Earlier this week, the House Judiciary Committee released seven very solid principles that should guide Congress as it considers the taxation of goods purchased on the Internet. Unlike the severely flawed Marketplace Fairness Act (MFA), which was passed by the Senate earlier this year, the outline offered by Chairman Bob Goodlatte (R-VA) and Subcommittee on Regulatory Reform, Commercial and Antitrust Law Chairman Spencer Bachus (R-AL), respects both the concerns of taxpayers and the sovereignty of states.
Their principles would keep taxes low, level the playing field for all businesses, preserve interstate tax competition, prevent out-of-state tax collectors from unaccountably auditing and harassing businesses and individuals, simplify the collection and remittance processes to minimize or eliminate compliance costs, and maintain an appropriate balance of power between state governments and the federal government. Based on these precepts, the many defects of MFA (that NTU has often highlighted) should disqualify it from further consideration.
If Congress chooses to advance Internet sales tax legislation, strict adherence to these principles would protect taxpayers from unfair and unconstitutional taxes, as well as from predatory, out-of-state tax collectors. NTU, on behalf of our 362,000 members, applauds Chairmen Goodlatte and Bachus for their thoughtful efforts.0 Comments | Post a Comment | Sign up for NTU Action Alerts
(AUDIO) Speaking of Taxpayers: NTU Rates Congress – Sept. 20, 2013
Subscribe to NTU's podcast "Speaking of Taxpayers" via iTunes!
NTU's Rating for the last session of the 112th Congress is out - Pete & Doug discuss Congress' performance, and how big names scored. Plus, what is the "Second Obama Express"?0 Comments | Post a Comment | Sign up for NTU Action Alerts
DC Mayor Gray Presents $300 Million Gift to Local Unions
Last week, following in the footsteps of his predecessors, Washington, DC Mayor Vincent Gray announced the signing of a Project Labor Agreement (PLA) for the construction of the $300 million DC United soccer stadium. His reasoning? The PLA ensures that District construction workers are paid federal Davis-Bacon wage rates.
However, according to TheTruthAboutPLAs.com:
…existing law called the Davis-Bacon Act governing federal, federally funded and DC-funded projects already requires above-market government-determined union scale wages and benefits to be paid to craft labor with or without a PLA. It’s a smokescreen to cover the fact it is a gift to unions [emphasis added].
The White House explains that a PLA is “a pre-hire collective bargaining agreement with one or more labor organizations that establishes the terms and conditions of employment for a specific construction project.”
But let’s get real. A PLA is nothing more than a corrupt scheme that removes competition from the construction bidding process and instead awards a contract to unionized construction workers.
Unfortunately, we’ve seen this game played in DC before with Nationals Ballpark. The end result? Eighty-five percent of construction workers and 95 percent of minority-owned contractors were left out of the work, and the project cost tens of millions of taxpayer dollars more than anticipated. Makes one wonder just how much the city actually cares about its workers.
From our support of Right-to-Work laws and public pension reform, it’s no secret that National Taxpayers Union is an outspoken proponent of fair labor laws that benefit workers, not just union bosses. Despite what may appear to be a well-intentioned effort to protect workers, Mayor Gray’s PLA for the DC United Stadium is nothing more than a kickback scheme to his union pals. The deal represents another example of just how dangerous backroom government dealings with unions can be – not only to taxpayers but to non-unionized construction workers struggling to find work in the Obama economy.
For more on the DC United Stadium PLA debacle, go HERE.0 Comments | Post a Comment | Sign up for NTU Action Alerts
Today, the Republican Study Committee released a health care bill that would repeal the Affordable Care Act, or “Obamacare,” and replace it with a number of market-based reforms and improvements to the tax code. You can read more about the legislation here and read NTU’s supportive letter to the bill’s author, Rep. Phil Roe (R-TN), here.0 Comments | Post a Comment | Sign up for NTU Action Alerts
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Today’s Taxpayer News!
Another “green” bust: An electric car charging company in Phoenix which was sponsored by the Department of Energy is considering bankruptcy after admitting the stations they installed are not making a profit and disclosing that DOE’s “EV Project” spent almost $100 million of taxpayer money to help prop up the fledgling company. Read more here.
Tattoo stamps? A Raleigh, NC tattoo parlor has been accepting SNAP cards (a.k.a. food stamps) totaling hundreds of dollars. Read more at Red Alert Politics.
HipsterCare: Watchdog News highlights a new, and quite psychedelic, ad from Oregon’s state agency administering the Affordable Care Act (Obamacare). The ad, part of a longer campaign to enroll Americans, costs taxpayers almost $10 million. The TV ads themselves total $3.2 million in taxpayer funds.0 Comments | Post a Comment | Sign up for NTU Action Alerts