As you may have heard, many states in our union have budget troubles; one of the biggest problems being underfunded pensions. Reuters reports that estimates put the gap in the range of $700 to $3 trillion. Despite the range being akin to saying, “I’m somewhere between Ohio and Nevada” the shortfall has gotten a whole host of people bent out of shape. It’s gotten so bad that Bill Gates has chimed in, evoking Enron for crying out loud (and here we thought that was only for journalists who cover accounting once every decade).
All this has the GASB to going back to the drawing board as David Bean, the GASB’S Director of research and technical activities, announced that the more disclosures will be proposed this summer. There are plenty of areas that up for debate but Mr. Bean mentioned that certain topics get especially contentious, apparently to the point that it comes to blows.
“Where the fistfights occur is with the discount rate,” Bean said about returns on pension funds’ investments, which affect how well a government can cover those liabilities. The board would require governments to disclose their long-term expected rate of return on plan investments as determined by actuaries, Bean said. “This is the actual expected rate of return as recommended by the actuaries,” he said. “We’re going to make very clear this is not a number that is pulled out of the air. This is based on solid science.”
It’s pretty clear that this problem will only get worse. If you were suddenly told that you had to use science rather than a dartboard, wouldn’t you want to punch someone’s lights out?
Did I say lending? Sorry, that’s not technically accurate. Deloitte Consulting is monitoring Michigan’s welfare computer systems and that involves billable hours. Lots of them. $15 million worth.
The state of Michigan is spending millions of dollars on a contractor to run its welfare computer system partly because it doesn’t offer enough money to attract new hires. A system called Bridges keeps track of welfare cases in the Department of Human Services. In February, Deloitte Consulting was given a one-year contract for about $15 million to maintain it and make regular updates.
Of course it would be cheaper if the Wolverine State did this themselves but there’s a small problem:
[The State’s technology department] lost 15 people to early retirement in December and had several vacancies starting at roughly $42,000 a year. Nobody applied.
You may have heard that California is having some budget issues. Sure there’s this Wisconsin business and all that but seriously folks, Californ-I-A is really in the fiscal shithouse. There are a number of reasons for this, most of which we won’t get into here but it should be noted that ill-behaved celebrities haven’t been receiving their fair share of blame in the press.
Luckily we have the real America’s news network going to great lengths to inform us about Lindsay Lohan’s role in fiscal catastrophe:
Factoring in all the court dates, court postponements (like when she was partying in Cannes and couldn’t get back to the U.S for a hearing), arraignments, judge and prosecutor fees, jail visits (she has had three stints in the slammer – 84 minutes, two weeks and one evening before posting bail, mug shots (four and counting), probation officers, random drug testing resources, SCRAM bracelets (these generally cost over $100 to install and have a daily fee of about $18) and LAPD security to and from court, how much is Lohan costing the taxpayer?
“It has been four years, and we’re talking about quite a few county law enforcement professionals, so it is probably safe to say several million dollars,” California-based civil law trial attorney David Wohl told FOX411’s Pop Tarts.
And given that Lohan has thus far refused to enter into a plea deal regarding the theft incident, her current theft case could potentially go to trial, costing Californians much more.
MILLIONS! It’s been a while since your humble editor had to make any materiality calculations but taking a quick look around, California’s budget deficit is currently in the nabe of $25 billion. So apparently if LiLo was shipped off to the Dakotas, Wyoming, or some other state that was in a less dire financial situation, things in Cali would be plumb-dandy? Strange thing however, there doesn’t appear to be an “elimination of celebrities that are a burden on society” on the L.A. Times’s budget balancer.
Perhaps Fox is onto something here? Jerry Brown would probably appreciate the other help. Pro bono of course.
The battle between California and New York for the biggest fiscal shitshow has reached new heights as Albany seems to be going after New Yorkers where it really counts.
For many of you living in New York, grabbing a bagel at your local shop is part of the weekday morning routine. You walk in, wait in line, place the order, pay the total and get on with your day. It’s good to know that the one constant in your life is that the Ess-a-Bagel will charge you the same price for your sesame seed bagel with butter day after day after day.
Well! That constant, your rock, your consistently-priced doughy security blanket may soon be stripped away from you. The Journal reported yesterday that bagel chain Bruegger’s got the wrath of the New York Department of Taxation and Finance, demanding that owner Kenneth Greene start collecting “taxes on all bagels, except for those that remain intact and are consumed off premises,” and collected a ‘significant’ sum of taxes owed.
Why, you ask? Because an obscure law on the books says that a sales tax is to be charged on “sliced or prepared bagels (with cream cheese or other toppings).” OH! And if you eat your everything with cream cheese and tomato in the shop, you’ll also be charged the tax.
The Post has stretched the lengths of investigative journalism once again to find out that most of the vendors around the City haven’t been charging you the extra 9¢ for that carbolicious breakfast.
[T]he vast majority of the bagel vendors The Post visited yesterday didn’t tax sliced bagels with no toppings as they are supposed to.
“I don’t think it’s fair. Why would I put tax on a sliced bagel when you don’t want nothing on it?” said Basil Colon, a cashier at Daniel’s Bagels on Third Avenue in Murray Hill.
He served a cinnamon-raisin bagel, sliced with no spread, to a Post reporter for $1.10, which didn’t include the extra tax of about 9 cents.
Like many bagel-store workers throughout the city, he didn’t know about the slice tax.
We think we speak for everyone, when we say, “What. The. Fuck. Albany?” This is what it has come to? The dire fiscal needs of the Empire State have gotten to the point that you’re shaking down bagel shops for an extra 9¢ per bagel? Granted, that may be a lot – A LOT – of bagels but you’re applying the smallest bandage in the box to a gaping head wound. A head wound that has caused many to think that the next step is to put a tourniquet on the neck of the state government.
You really want to kill the will of the people? Just keep shit like this up. Next thing you know they’ll start slapping the tax on pizza unless you buy the whole pie…unsliced.
As the State Controller of California, John Chiang arguably has one of the worst jobs on Earth. Public service is a fine calling and working for the Terminator probably has its moments of awesomeness but he still presides over one of largest fiscal nightmares you could possibly imagine.
For starters, it doesn’t help when you overshoot tax revenues for the month of April by $3 billion. Plus, you’re dealing with a state legislature that is probably incapable of agreeing on what ocean serves as the border of their state.
So take that and a bunch of other stuff that’s not really worth rehashing, you get this, “[W]ithout a new spending plan that closes a $19 billion shortfall, the state would run out of money by late October. ‘We will run out of money if everything remains the same,’ [Chiang] said in an interview.”
Of course the state Assembly’s Republican leader, Martin Garrick, finds this to be a load of crap since what it comes down really is your political party “[He] didn’t represent the fact that it is his party’s own lack of leadership that have led to these delays.”
Look, we’ve all accepted the fact that California is the brokest-ass state of the union and is completely inept when it comes to doing anything about it. Sure New York is a pathetic loser that manages to embarrass itself on a regular basis and most of the rest of the states out there leave a helluva a lot to be desired but Cali really outdoes everyone on a regular basis. This will make two years straight of issuing IOUs at the expense of citizens and yet the diaper-wearing California reps do nothing.
If Whitman gets in there, her first act as Guv could be to auction them off one by one (or just list them all as “Buy It Now” for $1). Of course the take wouldn’t be nearly enough to fix the budget but at this point a symbolic gesture will do.
An interesting idea from the Tax Foundation’s Blog today that comes by way of Nebraska State Senator Rich Pahls. TF reports that Senator Pahls plans on introducing legislation that would broaden the sales tax base that would, theoretically, lower income or property taxes. TF takes it slightly further than Senator Pahls and suggests that groceries should be included in this broadened base.
There are few states that already tax groceries: “Alabama, Arkansas (3%), Hawaii, Idaho, Illinois (1%), Kansas, Mississippi, Missouri (1.225%), Oklahoma, South Dakota, Tennessee (5.5%), Utah (1.75%), Virginia (1.5% + 1% local option tax), and West Virginia (5%),” and TF argues that more states could benefit from this policy:
Broadening the sales tax base and lowering the rate is a good idea and a move in the direction of sound tax policy. Services should be taxed. Groceries should be taxed. All end-user consumption should be taxed. There is no reason that entire sectors of the economy and swaths of consumption should go untaxed while others are singled out for taxation. Broadening the tax base allows the government to raise the same amount of revenue with a lower tax rate, which reduces distortions in the economy. Taxing all consumption at the same low rate keeps lawmakers from picking winners and losers in the market and ensures you will be taxed equally no matter what you choose to purchase.
Unless you’re one of those people that doesn’t want pay taxes period, this is a sensible solution for states looking to close their budget gaps (even just a little bit). BUT! As you might imagine, taxing groceries is a hot political spud that, for some, is simply not an option:
[T]his type of reform is seen as radical and a political non-starter. One reason is that people have concerns that changes such as applying the sales tax to groceries might unfairly or disproportionately impact the poor. Even Sen. Pahls seems reluctant to embrace this “emotional” reform.
First, remember that broadening the tax base allows us to lower the rate, so that everyone, poor and rich alike, will be paying a lower tax rate on their non-grocery purchases, offsetting some of the increased tax paid on groceries. Still, lower income people spend a disproportionate amount of their income on necessities like food, and they may very well come out behind even after accounting for the lower rate. Then I would recommend implementing or expanding food assistance programs (which provide free food, not just tax-free food) targeted at those who truly need it.
The bottom line is that most of us can afford to pay sales tax on our grocery purchases. Exempting groceries for everyone is a very costly and indirect way of providing assistance to the poor.
Forget for a second that most state politicians can’t entertain actual solutions to budget problems and taxing groceries is sound policy. Think about it. If a states settles on a 5% grocery tax and you purchase $100 worth, that’s an extra $5. That isn’t going to put anyone on the street and if it does, we recommend sticking to the produce section where food is considerably cheaper.
And from a more practical standpoint, it certainly makes more sense than taxing shoe shines and jugglers.
Broadening the Sales Tax Base in Nebraska is the Right Idea [Tax Foundation]
Okay, so New York is in a dire fiscal situation and David Paterson is pulling out all the stops. Last week, he started kicking the idea around of temporarily freezing New York State tax refunds for individuals and businesses until a state budget is in place.
Naturally, the Governor is putting this on the New York State legislature saying that if they do not ‘act, and close this deficit with real and recurring deficit reductions, not made-up, phony revenue enhancers that don’t really exist’ then the state could go bankrupt. Don’t blame him, New Yorkers! He’s trying to fix this damn mess.
According to a report from WRVO, the state would freeze $500 million in taxpayer refunds and $200 million in business refunds to April 1st. Are people really getting their tax returns filed that quickly? Is there some kind of recessionary trend that shows that tax returns are filed more quickly during bad economies? Nothing is official yet so don’t worry but sounds like they’re running out of ideas up there.
Regardless of the suggestion, Paterson’s critics are not down for this, as Assembly Minority leader Brian Kolb called the withholding tax refunds “an absurd and crazy idea.”
Since “absurd and crazy” seems to be par for the course in Albany, we can’t really say that this is the worst idea David Paterson has ever had. He’s talking to Eliot Spitzer again, isn’t he?