Matt Yglesias

27 Responses to “Fun With State Budgets”

1. minderbender Says:
   December 11th, 2008 at 11:28 am

   But how do you allocate the aid to state & local government? Per capita? Which level do you favor – state, county, city? I suppose all of the above, but I think it’s tricky, you don’t want to punish responsible states by giving more to the states that are facing bigger budget shortfalls (or whatever).

2. Erik Says:
   December 11th, 2008 at 11:34 am

   “it’ll be very difficult for the Finlands and Denmarks and Portugals of the world to take decisive action without Germany cooperation:”

   “And cuts in state budgets will only make a looming recession first.”

   I had assumed that many prominent bloggers not only use a time-delay publishing option to spread out their work across the day, (when in fact they may only do a spate of blogging during a few hours,) but I also assumed they had an editor or friend or someone glance over the posts before they went live. Or even after they were posted. This is apparently not the case.

   A potential blog topic: methods of blogger/editor relations that allow for fast, timely, but spell-checked posts.

3. Joel Says:
   December 11th, 2008 at 11:45 am

   Hmm. Vermont is down 10% in sales tax and 0.5% in income tax, yet is up 26.2% in total taxes. Wyoming is down 10.5% in sales tax and has no income tax, yet is up 12.6% in total taxes. Similar paradox for Oklahoma. What’s their secret?

4. Jerome Says:
   December 11th, 2008 at 11:46 am

   iPhone blogging. Only possible explanation.

5. James F. Elliott Says:
   December 11th, 2008 at 12:29 pm

   I can’t wait until the state runs out of money, and then I can be out of a job, too!

   Shit.

6. Cyrus Says:
   December 11th, 2008 at 12:55 pm

   Hmm. Vermont is down 10% in sales tax and 0.5% in income tax, yet is up 26.2% in total taxes… What’s their secret?

   Well, there’s also a property tax, and a footnote to table one in the second report says that Vermont’s revenue was up because of a legal settlement.

   As it happens, Vermont is one of the few states without a balanced budget amendment to its constitution, if not the only one. My parents live there, and when I was talking to my dad on the phone a couple of weeks ago I mentioned that that would be very good news for Vermont, because increased social spending seems like the best way to mitigate a recession. Then he reminded me that Vermont’s governor is a Republican, so he’s keen on “tightening belts” and stuff. Whoops.

7. Jasper Says:
   December 11th, 2008 at 1:16 pm

   But how do you allocate the aid to state & local government? Per capita? Which level do you favor – state, county, city? I suppose all of the above…

   Per capita would get my vote. There would be a modest redistributionist effect that seems justifiable in my view. But I really hope Washington simply forks over money to the fifty states, and lets them decide how to divvy it up internally. There are tens of thousands of municipalities in the U.S. It would be an organizational nightmare trying to aid them directly.

   …you don’t want to punish responsible states by giving more to the states that are facing bigger budget shortfalls (or whatever).

   That’s true, you don’t. I advocate something along the lines of $500 billion spread over three years — somewhat front-loaded, and done on a straight per-capita basis. If you do the math it would be just what the doctor ordered for most states. You could even make the argument that there ought to be a modest modification upwards for states that have seen their services most strained by illegal immigration. The restrictacons are always bitching about this topic, so here’s an opportunity to redress it. Also, to echo lots of folks over the last few days, we ought to restore general revenue sharing between the states and the feds. My own view is that eventually, we ought to consider a VAT whose revenues are divided between Washington and the 50 states — based on a permanent formula (say, 70-30 in favor of the Feds). There are a whole host of reasons why a modest shift toward consumption taxation makes sense (provided it’s accompanied by progressive shifts elsewhere), but one of the main objections raised by opponents is that a VAT or similar national measure would upset the apple cart of state finances (states, of course, tense to rely heavily on sales taxes). Well, this would be a way to get around that objection. States would be free to levy additional sales taxes beyond the national VAT were they so inclined.

8. Jasper Says:
   December 11th, 2008 at 1:21 pm

   But I really hope Washington simply forks over money to the fifty states, and lets them decide how to divvy it up internally.

   Just to be clear, this shouldn’t, of course, preclude the participation of sub-state level governmental units in infrastructure stimulus. That $500 billion figure I mentioned above should be in addition to federal infrastructure dollars, it should not include it.

9. AP Says:
   December 11th, 2008 at 6:17 pm

   The California legislature seems to be trying to put off settling on a final budget as long as possible, maybe hoping to wait until after January 20th. I don’t know how likely it is that they’ll pull it off, but it’s an interesting sign of the times. Lots of uncertainty, but that might be better than being certain that things will be really bad.

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