While California’s economy is surging to a record, the plight of Placentia shows how a financial misstep can imperil municipalities facing rising costs for retirees and infrastructure. The community of 52,000 exhausted most of its reserves on a failed railroad project. Southern California’s Adelanto and Upland are also fighting to avert insolvency.
WalletHub analyzed how state and local tax rates compare to the national median in the 50 states as well as the District of Columbia. We compared eight different types of taxation in order to determine: 1) Which states have the highest and lowest tax rates; 2) how those rates compare to the national median; 3) which states offer the most value in terms of low taxation and high cost-of-living adjusted income levels.
The average American family pays nearly $7,000 in state and local taxes in a given year, but the actual amounts vary wildly. A Californian who lives on the western side of Lake Tahoe pays almost three times more in state taxes than their neighbor on the Nevada side of the lake. Someone living in Portland, Ore., pays more than twice as much as a neighbor living across the Columbia River in Vancouver, Wash.
While lawmakers begin discussing ways to fix California’s cash-strapped teacher pension system, another long-term financial problem continues to fester.
In a far-ranging assessment of how much California pays its help, a nonpartisan report on Tuesday said the state government will spend a half-billion dollars more on employee compensation next year, but most workers’ take-home wages will continue to lag behind inflation.
States withdraw money from budget stabilization funds primarily to counter unexpected drops in revenue. Pew research has found, however, that most states do not consider revenue fluctuations in determining how and when to deposit money into their reserve funds. According to “Managing Uncertainty,” Pew’s report on strategies to smooth revenue volatility, only a dozen states, including Massachusetts, Texas, Virginia, and Utah, link deposits directly to unexpected surges in volatile tax streams. California could join this list of states if Gov. Brown’s proposal passes.
“Here in the wealthy heart of Silicon Valley, the roads are pocked with potholes, the libraries are closed three days a week and a slew of city recreation centers have been handed over to nonprofit groups. Taxes have gone up even as city services are in decline, and Mayor Chuck Reed is worried. . . . In San Jose and across the nation, state and local officials are increasingly confronting a vision of startling injustice: Poor and middle-class taxpayers — who often have no retirement savings — are paying higher taxes so public employees can retire in relative comfort.”
We also find that the plan raises some important policy issues related to the financing and maintenance of state infrastructure and serves as a valuable starting point for legislative discussions. However, we note that the plan does not include some key information and suggest some changes that could make the plan more helpful to the Legislature. In addition, given the size of the state’s infrastructure investments and their long-term nature, we recommend that the Legislature take a more active role in considering infrastructure in a comprehensive way.
The California State Transportation Agency has released the California Transportation Infrastructure Priorities (CTIP workgroup vision and interim recommendations document. Last year’s budget directed the new Transportation Agency to work with stakeholders to develop funding priorities and long-term funding options. The workgroup examined the current status of the state’s transportation system and discussed challenges that lie ahead. The interim recommendations offers both a vision for California’s transportation future and a set of immediate action items toward achieving that vision that are centered on the concepts of preservation, innovation, integration, reform and funding.
After a frustratingly slow recovery from the severe recession of 2007 to 2009, the economy will grow at a solid pace in 2014 and for the next few years, CBO projects. Real GDP (output adjusted to remove the effects of inflation) is expected to increase by roughly 3 percent between the fourth quarter of 2013 and the fourth quarter of 2014—the largest rise in nearly a decade. Similar annual growth rates are projected through 2017. Nevertheless, CBO estimates that the economy will continue to have considerable unused labor and capital resources (or “slack”) for the next few years. Although the unemployment rate is expected to decline, CBO projects that it will remain above 6.0 percent until late 2016. Moreover, the rate of participation in the labor force—which has been pushed down by the unusually large number of people who have decided not to look for work because of a lack of job opportunities—is projected to move only slowly back toward what it would be without the cyclical weakness in the economy.
The bills are part of a greater movement among states to stop contracting out in cases when the work is seen as better suited for public employees — an effort largely organized by the nation’s largest public services employees union, AFSCME.
California entered the new calendar year with generally good financial news. Total revenues topped estimates for January even though projections were recently revised upward as part of the Governor’s 2014-15 Budget submitted early this year. Overall spending was less than expected.
The proposal continues the Governor’s focus on paying down the “wall of debt,” a selection of budgetary liabilities the state incurred in addressing its past budget problems. The Governor’s emphasis on debt repayment is a prudent one. Overall, the Governor’s proposal would place California on an even stronger fiscal footing, continuing California’s budgetary progress.
Gov. Jerry Brown took a swipe at California’s critics during his State of the State address to the state Legislature on Wednesday, praising a “California comeback” he said delivered a million new jobs, a budget surplus and higher minimum wage.
Gov. Jerry Brown said today that California is continuing its “comeback,” with a budget surplus and am improving economy, but he urged the Legislature to restrain spending.