Tuesday, November 11, 2008

State Spending

I avoid political discourse like the plague - both sides are wrong more often than they are right - but if you get a chance to catch Gov. Paterson's town hall meeting that was on PBS tonight, it is worth a watch. His honesty about the severity of the economic crisis is scary but refreshing.



There was an interesting article in (USA Today of all places) on the pace of state spending across the US.



"Even as the economy slides into recession, many state and local governments continue to spend freely and expand their workforces.


State and local spending jumped 7.4% in the third quarter compared with a year earlier, the U.S. Bureau of Economic Analysis reports. Hiring increased faster than in any sector except health care.


Total state and local revenue grew just 2.6% in the third quarter. Sales tax collections fell 0.6% as consumers cut spending."



NY and CA are clearly the states with the biggest challenges in front of them. NY's economy has suffered a permanent shift, a portion of which is never going to recover. With major investment banks shifting to bank holding companies, the pay scale and profitability at the surviving firms will never be the same. So for all the local political sniping over standing up to "Downstate" - I have some unwelcome news - Downstate drives NY's economy and revenue from Downstate is likely to be permanently lower. This means fewer state jobs, reduced services, reduced state aid for education, higher property taxes, etc, etc. Funny, I didn't hear anyone run a political ad like that last week.

Separately, this is in poor taste, but it's quite funny.....




Cheers!

1 comment:

writing your dissertation said...

It seems that Congress explicitly determines how much to spend (or not spend) on these programs on an annual basis. Mandatory spending accounts for two-thirds of all government spending