State Chamber Policy Center Weekly Update

Call for Kiawah Issue Ideas: The Policy Center is shaping the list of policy issues to discuss at the Kiawah meeting in September and would appreciate your input. If there are any trending issues your chamber would like to see featured as part of an in-depth panel discussion, please let us know.

Taxation & Budgets

Fiscal Sustainability Remains Bleak for States: The Government Accountability Office (GAO) forecasts in a new report (pdf) that the gap between state and local government revenues and expenses will continue to widen in the years ahead. Governing Magazine reports that “States and localities will record operating balances with an aggregate deficit of 1.6 percent of gross domestic product this year, according to the report. Absent any reforms, the deficit will balloon to 2.7 percent within 30 years. To close the fiscal gap, governments would need to trim current expenditures by 14.2 percent and maintain that level of spending as a share of GDP in future budgets. While states and localities face several short-term fiscal hurdles—namely pension shortfalls and declining property tax revenues—narrowing the gap will prove even more difficult in the decades to follow….Most notably, the report cites rising health costs as the primary driver of the sector’s long-term fiscal challenges. Medicaid expenditures, along with health insurance costs for public employees and retirees, are expected to rise sharply.”

Webinar—Cost-Benefit Analysis: On Tuesday, May 28, 2013 at 3:00 PM EDT, the Council of State Governments (CSG) will host a webinar looking at the Pew Center for the States’ Results First initiative, which this newsletter has highlighted in the past. “The Results First initiative works with states to implement an innovative cost-benefit analysis tool that helps them invest in policies and programs that are proven to work.” Click here to register.

Map—Inheritance & Estate Tax Rates: The Tax Foundation is out with its latest map showing “inheritance and estate tax rates and exemptions as of January 1, 2013. Estate taxes are levied on the estate itself prior to transfer; inheritance taxes are levied on the transfer of wealth based on the recipient’s relationship to the decendent. New Jersey and Maryland are notable for having both an estate tax and an inheritance tax.” A large version of the map is here.

Opposition Watch—Liberal Group Objects to Business Rankings: The liberal group Good Jobs First has released a report (pdf) that criticizes the methodology of various studies from Tax Foundation, American Legislative Exchange Council (ALEC), Beacon Hill Institute, and the Small Business and Entrepreneurship Council (SBEC). The group claims that “prominent studies that purport to measure and rank the states’ ‘business climates’ are actually politicized grab-bags of data. They have no predictive value and should not be used to inform public policies.” Those who developed the rankings quickly responded. Tax Foundation economist Scott Drenkard told Tax Analysts that the critique is a “non sequitur” and that “states score differently in different indices because the indices measure different things. Our index is a measure of how well each state conforms to the principles of sound tax policy: simplicity, neutrality, transparency, and stability.” SBEC chief economist Raymond Keating said, “It’s not surprising that a left-leaning, pro-labor union group would not like the realities that are pointed out in our annual analysis.” Jonathan Williams, director of tax and fiscal policy at ALEC, said Good Jobs First “cherry-picks data and then commits several major statistical errors.” The Beacon Hill Institute spokesperson said the “critique is one of the most ridiculous I have ever read.”

Education

High Schools Fail to Prepare Students for Community College: The National Center on Education and the Economy (NCEE) has released a report — What Does It Really Mean to Be College and Work Ready: The English and Mathematics Required by First Year Community College Students (pdf) – finding that “students are failing to learn the basic math and English skills and concepts needed for success in community colleges.” Michael Cohen, President of the education reform organization Achieve, adds: “This very important report underscores the urgent need for states to implement the Common Core State Standards. If the CCSS were properly implemented, students would have the kind of mastery of middle school mathematics skills identified in this report as the most important math skills needed in the first year of community college. Similarly, the report makes it crystal clear why the CCSS English literacy standards stressed the need for great improvements in students’ ability to do non-fiction reading and writing.”

Health

States Do Their Part to Bend Cost Curve: The Council of State Governments (CSG) profiles the actions that some states are taking to reduce their health care costs. “The biggest health care expense for states is their share of the Medicaid program, which provides health insurance for low-income individuals. In 2011, total Medicaid spending was $407.7 billion. The program has surpassed K–12 education as the biggest state budget expenditure. Those are some of the reasons states are looking for ways to contain costs.” For example, Massachusetts is tying health care costs to the state inflation rate, Arkansas is moving from volume based to value based payment, and Minnesota is establishing coordination at all levels of health care.

All the above information and more can be found in the Policy Center’s searchable Newsletter Archive and Policy Clearinghouse. To access the newsletter archive and clearinghouse click here and enter user name cosc and password clearinghouse. Click “Newsletter” from the left side menu to browse past newsletter items by category, date, or see all past newsletters under newsletter archive. To search past newsletters click the “search” option from the left side menu.

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