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Exaggerated Claims Obscure State Budget Picture

October 28, 2011

A group called State Budget Solutions issued a report this week that claims to “reveal” the true size of state debt and warns of a looming state budget crisis. In reality, this report does more to obscure than to reveal the fiscal health of the states.

Helping States Better Understand Budget Choices

October 21, 2011

To understand how a proposed state policy change — say, expanding or restricting Medicaid eligibility — would affect the state’s budget, policymakers and the public need to know the cost of simply continuing the program in its current form, after adjusting for factors like inflation and demographic changes. Yet only 22 states plus the District of Columbia (see map) produce the document needed to make this comparison, called a “current services baseline.”

State Tax Breaks a Costly, Ineffective Way to Attract Wealthy Seniors

October 17, 2011

Can a state get an economic boost by giving senior citizens special tax breaks? Maine’s governor, Paul LePage, claims so. Last week he renewed his proposal to exempt all pension income from the state’s income tax. (Maine already exempts Social Security income and some pension income.) He argues that this tax cut would encourage wealthy retirees to move to Maine. Other states have considered similar proposals.

Income Taxes Show Their Value

July 11, 2011

State revenues — especially income tax collections — are beginning to recover from the worst recession since the 1930s. As we described in our recent paper, at least 28 states have reported that tax collections for the just-ended fiscal year will exceed the amount expected when their budgets were adopted last spring.

Six Plans Show That Common-Sense Pension Reforms Work

July 8, 2011

The news coverage of state and local pension programs in recent months has been unremittingly negative, so it’s refreshing to read a new report by the National Institute on Retirement Security (NIRS) — a non-partisan research institute — that looks at some plans that are functioning well and explains what they’re doing right.

Ohio Digs Its Budget Hole Deeper

June 30, 2011

Ohio, which has cut K-12 and higher education funding, health care and child care assistance for the poor, and other public services over the past few years to help close budget shortfalls, is poised to give its wealthiest residents a big new tax cut starting in 2013. The 2012 budget that the legislature approved this week eliminates the state’s estate tax, which generated more than $280 million in revenue in 2010.

Four Little-Understood Points on State Pension Problems

May 12, 2011

Fixing underfunded state and local pension programs is a long-term goal that most states can accomplish with moderate, common-sense steps. A major report we released today outlines those steps. Here are highlights from the report:

State Pensions in Better Shape Than New Pew Report Suggests

April 26, 2011

State pension funding is back in the news today with a new update on state pension shortfalls from the Pew Center on the States. For the most part, the report — which is based on each state pension fund’s most recent Comprehensive Annual Financial Report (CAFR) — gives a snapshot of pension funds two years ago, when they were still reeling from the effects of the 2008 stock market crash. The Pew report doesn’t account for the stock market’s improvement over the past two years, or the recent pension reforms in many states.

Conservative Agrees: Don’t Blame Public Pensions for State Budget Problems

April 5, 2011

Eli Lehrer, vice president of the conservative Heartland Institute, wrote in the Weekly Standard recently that pension reforms won’t solve states’ current budget problems because pension contributions make up only a small share of state spending and many states’ pension systems are in pretty good shape.

Time for a New Look at Tax Breaks for Seniors

March 23, 2011

Here’s a state-level idea that represents sound public policy and, fortunately, is attracting important bipartisan support: trimming tax breaks for pension income. Among the state leaders who have proposed it are Michigan’s Republican governor, Rick Snyder, Hawaii’s Democratic governor, Neil Abercrombie, and the Democratic president of the Illinois Senate, John Cullerton.

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