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The Return of State Surpluses Could Point to More Growth to Come

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This is from The Daily Beast.

Maybe the rest of the nation should follow the example set

the state of Texas.

My home state of Indian is not doing bad budget wise.

Hey Barack this is how to grow the nation’s economy.

This spring, budget surpluses are blossoming across America. We’ve noted that the combination of employment growth and tax increases is boosting federal revenues significantly—13 percent in the first five months of the current fiscal year. Combined with a bit of fiscal discipline, the higher revenues are helping to reduce the (still massive) federal budget deficit.

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Matthew Borkoski/Getty

But America’s 50 states aren’t permitted to run deficits. So each year, state legislatures pass, and governors sign, budgets for the next fiscal year in which expenditure are supposed to align with expected revenues. Then, they wait and hope that the revenues actually materialize.

That’s happening—and more. In the current fiscal year (fiscal 2013, which started last spring or summer in most states), the level of spending rose just 2.2 percent from fiscal 2012, according to the National Association of State Budget Officers (NASBO). That’s far below the historical average of 5.6 percent growth per year. But state revenues are growing more rapidly than spending. In the fourth quarter of 2012, according to the Nelson A. Rockefeller Institute of Government, state tax receipts were up 5.7 percent from the fourth quarter of 2011. For the full year, revenues probably rose about 4 percent. Now, late 2012 tax receipts were boosted in part because so many companies rushed dividend payments out the door to avoid the prospect of higher taxes.

Still, with revenues rising more rapidly than spending, deficits are evaporating in state capitals. “It’s likely most states will end the year with a slight surplus,” said Brian Sigritz, director of state fiscal studies at NASBO.

Surpluses are showing up in places you’d expect. North Dakota, currently enjoying an energy and agricultural boom, is projecting a $1.6 billion surplus over its two-year budgeting cycle. Texas, another resource-rich state, foresees an $8.8 billion surplus over its current two-year budget cycle.

But the Rust Belt is also regaining some of its fiscal shine. Ohio is expecting a $1 billion surplus for the current fiscal year. Wisconsin is looking at $484 million in black ink. Other states with surpluses include Iowa ($800 million) and Tennessee ($580 million). West Virginia completed its 2011–12 fiscal year with a surplus of about $88 million.

Some of the coastal states whose finances were hit hardest by collapsing housing markets and persistently high unemployment are also making a comeback. For the past several years, California’s massive, recurring deficits have made life miserable for politicians and inspired comparisons to Greece. Thanks to tough spending cuts, higher taxes, and a general recovery, California’s finances are on the mend. “California expects to take in $2.4 billion more in revenue than it will spend this fiscal year, which ends June 30,” Tami Luhby of CNN Money reported. “After paying off a shortfall from last year and setting aside funds for upcoming obligations, it’s on track to end the year with a $36 million surplus.” Florida, another state that has had to deal with harsh cuts to rein in deficits, is also now in the black. The current projection is for a surplus of $437 million.

Now, this doesn’t mean the state and local financial problems are over. States in New England and the Northeast ravaged by slow growth and weather-related destruction—New York, New Jersey, Connecticut—must still cut their way to balance. In real terms—i.e., adjusted for inflation—state revenues are still below the their pre-recession peak, notes Liz McNichol, an analyst at the Center for Budget and Policy Priorities. Most states have long-term problems with underfunded pensions. Cities, which have far less flexibility in raising revenues, continue to suffer. On Monday, Stockton, California, declared a rare Chapter 9 bankruptcy.

But in states with surpluses, life is becoming more fun for governors. Governors like John Kasich (Ohio), Mike Pence (Indiana), and Terry Branstad (Iowa) are pushing for tax cuts. Others are essentially pocketing the cash, stowing it in rainy-day funds or using it to cope with higher spending requirements. Tennessee is looking to use cash to spend more on health care and its prison system. Florida Gov. Rick Scott, up for reelection in 2014, is seeking to raise pay for teachers. Looking ahead to fiscal 2014, which starts for most states later this year, NASBO says almost every state is projecting a spending increase, and up to a dozen are cutting income taxes. (Here’s a state-by-state summary of next year’s budgets.)

Analysts are holding out hope that the return of surpluses will help reverse one of the most devastating results of the last several years. Governors and legislatures have frequently sought to balance their budgets by firing employees—including teachers and police officers. Since January 2009, state and local governments have reduced employment by 746,000—or about 4 percent. It’s likely that some of the increased tax revenues will be used to recall laid-off employees.

Sustained growth is the miracle cure for deficits. And when it comes to state finances, surpluses can help spur further growth.

 

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Michigan Republicans draw union ire with sudden votes on right-to-work legislation

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This is from Fox News Politics.

I applaud the Michigan Legislature for standing up for workers.

The union goons have been sucking the life blood from Michigan.

I hope this right to work legislation becomes law.

How many of the unions goons were from Michigan?

Unions have a tendency to bus in there rent a mob goons.

 

Michigan Republicans touched off a firestorm Thursday with an abrupt push to pass right-to-work legislation, in what would be a blow to organized labor in the home of the U.S. auto industry.

Right-to-work legislation prohibits unions from forcing workers to pay union dues. Unions and their Democratic allies adamantly oppose these laws — but with little warning, Michigan Republicans on Thursday laid the groundwork to, in a matter of days, make their state the 24th with right-to-work legislation.

“This is all about taking care of the hard-working workers in Michigan, being pro-worker and giving them freedom to make choices,” Michigan Gov. Rick Snyder said. “The goal isn’t to divide Michigan, it is to bring Michigan together.”

The votes Thursday, though, drew hundreds of union-tied protesters to the capital, some of whom were pepper-sprayed by police when they tried to storm the Senate chamber.

Just hours after the bills were introduced, both Republican-controlled chambers approved measures prohibiting private unions from requiring dues. The Senate quickly followed by voting to impose the same requirement on most public unions.

Because of rules requiring a five-day delay between votes in the two chambers on the same legislation, final enactment could not take place until Tuesday at the earliest. Snyder, who previously had said repeatedly that right-to-work was “not on my agenda,” told reporters Thursday he would sign the measures.

Democrats denounced the bills as an attack on worker rights, but the GOP sponsor insisted they would boost the economy and jobs. A House vote on public-sector unions was expected to come later.

A victory in Michigan would give the right-to-work movement its strongest foothold yet in the Rust Belt region, where organized labor already has suffered several body blows. Republicans in Indiana and Wisconsin recently pushed through legislation curbing union rights, sparking massive protests.

Even before the Michigan bills turned up, protesters streamed inside the Capitol preparing for what appeared inevitable after Snyder, House Speaker Jase Bolger and Senate Minority Leader Randy Richardville announced at a news conference they were putting the issue on a fast track.

Lt. Gov. Brian Calley repeatedly gaveled for order during the Senate debate as Democrats attacked the legislation to applause from protesters in the galley.

Eight people were arrested for resisting and obstructing when they tried to push past two troopers guarding the Senate door, state police Inspector Gene Adamczyk said.

Protesters waved placards and chanted slogans such as “Union buster” and “Right-to-work has got to go.” Adamczyk said the troopers used pepper spray after the people refused to obey orders to stop.

The Capitol, which was temporarily closed because of safety concerns, reopened Thursday afternoon, sending hundreds of protesters streaming back inside.

The decision to push forward in the waning days of the Legislature’s lame-duck session infuriated outnumbered Democrats, who resorted to parliamentary maneuvers to slow action but were powerless to block the bills.

House Democrats did walk out briefly Thursday in protest of the Capitol being closed.

Through a spokesman, President Obama also reiterated his opposition to right-to-work laws.

White House spokesman Matt Lehrich said Obama believes the economy “is stronger when workers get good wages and good benefits, and he opposes attempts to roll back their rights.”

Lehrich said Michigan workers’ role in helping reviving the U.S. auto industry shows “how unions have helped build a strong middle class and a strong American economy.”

Adamczyk estimated that about 2,500 visitors were inside the Capitol, where their shouts reverberated off stone halls and frequently could be heard inside the ornate chambers.

After repeatedly insisting during his first two years in office that right-to-work was not on his agenda, Snyder reversed course Thursday, a month after voters defeated a ballot initiative that would have barred such measures under the state constitution.

In an interview with The Associated Press, Snyder said he had kept the issue at arm’s length while pursuing other programs to bolster the state economy. But he said circumstances had pushed the matter to the forefront.

“It is a divisive issue,” he acknowledged. “But it was already being divisive over the past few weeks, so let’s get this resolved. Let’s reach a conclusion that’s in the best interests of all.”

Also influencing his decision, he said, were reports that some 90 companies had decided to locate in Indiana since that state adopted right-to-work legislation. “That’s thousands of jobs, and we want to have that kind of success in Michigan,” he said.

Snyder and the GOP leaders insisted the legislation was not meant to weaken unions or collective bargaining, saying it would make unions more responsive to their members.

Senate Democratic leader Gretchen Whitmer said she was “livid.”

Republicans have commanding majorities in both chambers — 64-46 in the House and 26-12 in the Senate. Under their rules, only a simple majority of members elected and serving must be present to have a quorum and conduct business. For that reason, Democrats acknowledged that boycotting sessions and going into hiding, as some lawmakers in neighboring Indiana and Wisconsin have done in recent years to stall legislation unpopular with unions, would be futile in Michigan.

Read more: http://www.foxnews.com/politics/2012/12/07/michigan-republicans-push-right-to-work-bill-amid-protests-from-union/#ixzz2ERzJz5T5 

 

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