Topic: Public Finance
News
Nov. 15, 2017

The LAO’s outlook shows the state would finish its 2018-19 budget year with more than $19 billion in reserves – assuming lawmakers and Gov. Jerry Brown don’t make any more spending commitments. About $11 billion is obligated for the state’s rainy day fund.

Lawmakers could spend about $7.5 billion of the surplus, although analysts recommend that they save it to prepare for a recession.

News
Nov. 14, 2017

The itemized deduction for state and local taxes has become a flash point in the debate over the GOP’s tax plans.

The House and Senate proposals call for sharply limiting or eliminating the so-called SALT deduction. Critics say Republicans in high-tax states would have a hard time voting for any bill that included this provision, because the deduction is so valuable to their constituents.

And it is, to some. But many people in high-tax states get no benefit from this deduction because they don’t itemize deductions or they are subject to the alternative minimum tax, which doesn’t allow it. Another group of people get little benefit because they are subject to the phaseout of all itemized deductions that kicks in at higher incomes.

News
Nov. 10, 2017

Some regions have seen catastrophic drops in ridership since 2010: 30% or more in Detroit, Sacramento and Memphis; 20% to 30% in Austin, Cleveland, Louisville, St. Louis and Virginia Beach-Norfolk ; and 15% to 20% in Atlanta, Charlotte, Los Angeles, Miami, San Antonio and Washington.

Adding rail service hasn’t helped. To pay for new light-rail lines that opened in 2012 and 2016, Los Angeles cut bus service. The city lost nearly four bus riders for every additional rail rider. Atlanta, Dallas, Sacramento and San Jose have seen similar results. The rail system in Portland, Ore., is often considered successful, but only 8% of commuters take transit of any kind to work. In 1980, before rail was constructed, buses alone were carrying 10% of commuters.

News
Nov. 10, 2017

The Los Angeles County Metropolitan Transportation Authority’s ridership has been falling steadily since 2014, losing on average 69,000 daily riders each month. The most recent 12 months of data show a decrease of more than 10% compared with the same period three years ago, and Metro’s current “annual boardings” — just under 400 million — represent a drop of almost 20% from the system’s 1985 peak, even though the county’s population has increased by nearly a fifth since then.

It wouldn’t be difficult to turn these figures around, as Metro’s history shows: The transportation authority should stop focusing primarily on building new rail and use a fair share of its voter-supplied wealth to lower fares and improve the bus system.

News
Nov. 9, 2017

It’s doubtful whether more than a relative handful of Californians have heard of the Unemployment Insurance Fund. It is, however, one of state government’s largest activities – and a case study in political mismanagement. Currently, California employers pay about $6 billion in payroll taxes into the UIF each year. And currently, the state Employment Development Department annually pays almost that much to jobless workers. Superficially, that would appear to be a sustainable equation, but in reality, it’s not. During periods of high payrolls and low unemployment, such as this one, the UIF should be building reserves that could cope with an economic downturn, when claims for jobless benefits increase. That’s the way it used to work – until political expediency and recession undid it.

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Nov. 17, 2017 / Andrew Khouri

Nov. 17, 2017 / The Editorial Board