Monday, April 2, 2018

Why Are States So Strapped for Cash? There Are Two Big Reasons

Money for roads.  Nope.
Money for 911 call centers.  Nope.
Money for pensions. Nope
Money for trash pick up. Nope
Money for Motor Vehicle license processing?  Nope
Money for schools.  Nope
Money for hospitals. Nope
Money for fire fighters.  Nope
Money for first responders.  Nope
Money for highway patrol.  Nope
Money for police. Nope.

The basic services we have grown to expect won't be there. 

Or....what little we get will be very very expensive.

From the Wall Street Journal
As state and local officials prepare their next budgets, many are finding that spending decisions have already been made for them by two must-fund line items that barely mattered when baby boomers such as Mr. Leavitt were growing up: Medicaid, the state-federal health insurance program for the poor and disabled, and public-employee health and retirement costs.

These days, they consume about one out of every five tax dollars collected by state and local governments. That is the highest share since Medicaid was created in 1965. Postretirement health benefits, which are harder to quantify, add to that burden and have cumulatively cost states more than $100 billion since 2008, according to government financial disclosures compiled by Merritt Research Services.

Those costs are outpacing growth in tax revenue year after year. In 2016, state and local governments collected about $136 billion more in taxes than they did in 2008, adjusting for inflation. Two-thirds of those additional dollars went to fund pensions and Medicaid, according to a Wall Street Journal analysis of Commerce Department spending data. “The more we stare at the data, the more we realize all roads lead back to Medicaid and pensions,” says Dan White, a director at Moody’s Analytics who has studied the issue.

The resulting revenue squeeze is making it harder for governments to pay for core services such as education, infrastructure, police and fire protection.

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