Challenges in Funding State Government

Challenges in Funding State Governments

It is the economy…still the biggest challenges facing state and local governments.    State and local tax revenues have been declining since 4^th quarter 2008, and corporate income taxes have been declining since 3^rd quarter 2007.   The recession impact was felt at the state and local government tax receipts for 5 quarters (4^th Qtr 2008 through 4^th Qtr 2009).    Year over year for 2010 inched up at about 2% rate (1^st and 2^nd quarter 2010 compared to 2009) state tax revenues.     This according to the Rockefeller Institute recent report on state and local government finances.   www.rockinst.org   

             However, state revenues took a major hit as tax collections were off about 20% below expectations over a 2-year period of economic slowdown (late 2008 through early 2009).   Planning for FY 2011 budgets will be a challenge, as all of the stopgap measures have been exhausted and some real budget cuts will still be required to balance state budgets.    In Colorado, the FY 2011 budget shortfall is estimated to be $1.5 billion, as compared to a $19 billion state budget.   In New Mexico, another $250 to $400 million needs to be cut from this FY budget, and it is likely that more reductions will be needed for FY 2012 (that starts July 1, 2011).

The Southeast and Rocky Mountain regions reported the largest declines in personal income tax collections at 9.6 and 6.3 percent, respectively. In fact, each single state in both regions reported declines in personal income tax collections.    In Colorado, personal income tax withholding was down about 4% in late 2009, but had slightly increased to about 3% (increase) in 2^nd Quarter 2010.   According to the Rockefeller Institute, Colorado and New Mexico were experiencing declining economic activity in August 2010, as compared to the rest of the United States.   Texas continued to maintain economic growth, although is has slipped from 7^th in FY06 to 13^th in FY11 on the Tax Foundation state business tax climate index.   www.taxfoundation.org 

The Rocky Mountain States are slipping on the Tax Foundation index, with New Mexico falling 10 slots from FY10 (#23) to FY11 (#33).   Under 4 years of a Democrat majority in both legislative assemblies and a Democrat Governor in Colorado, the state fell from FY08 (#10) to FY11 (#15) in the Tax Climate index.    Whereas the state of Utah as steadily moved from FY06 (#15) into the top ten FY11 (#9) in the Tax Climate index.  Arizona dropped one notch below New Mexico to FY11 (#34) after several years in the high 20’s in the Index.

Bring up the rear in FY11 are New York (#50), California (#49), New Jersey (#48), Connecticut (#47) and Ohio (#46).     Each of these state are characterized by high tax rates, significant public labor unions, and significant taxes on capital (such as California with almost 10% state tax on capital gains).

As various states struggle with a weak economy, it is likely that those states that reduce public spending and reduce dependence on government programs (and thus are able to reduce tax rates), but at the same time create a business friendly environment, are more likely to succeed economically going forward.   Clearly, as California and New York have experienced, their model is not working.  Whereas the Texas model and the Florida model are enhancing economic growth due to a better tax climate and business friendly state policies.     In the United States we have 50 models of state level democracy and free market capitalism underway.    The high tax, high regulation and high public union states are not competitive (nor financially sound), whereas the lower tax, lower regulation and less public union states are more competitive and fiscally sound.

© 2010, Jasper Welch, Four Corners Media, www.jasperwelch.org  

Insider NM Politics

Insider New Mexico Politics

New Mexico politics are always interesting.   And especially with the change from the corrupt Richardson Democrat administration to the new Republican Governor-elect Susana Martinez.    One of her campaign themes is to clean up Santa Fe.    And based on what some of the Albuquerque, NM TV stations are running and stories we've heard out of Santa Fe in the last year of "Big Bill", it is a mess.     Add in the dramatic NM budget crunch (the shortfall was estimated at $300MM, but may actually be closer to $450MM) when the legislature gathers in January.    With the new Guv in town, less money means big changes.  

One of the best insider NM blogs is by Joe Monahan  http://www.joemonahansnewmexico.blogspot.com
This week he has been blogging on the changes in the NM House, as the Republicans picked up 8 seats and the Democrats cling to a narrow 37D to 33R majority.  While Speaker Lujan (R-Santa Fe) is still the Speaker nominee in January 2011, the numbers suggest that if all the R's and 3 Democrats formed a coalition, they could swing the vote away from Lujan as the Speaker.  Somewhere in the mix is empowered House Minority Leader Tom Taylor (R-Farmington), who has a much stronger hand with new Republican Governor and 8 new GOP members.  Plenty of blogger fogger.

Meanwhile, Lt. Governor John Sanchez will be in Farmington, NM right before Thanksgiving for part of the new Republican administration's "listening tour".  

(c) 2010, Jasper Welch, Four Corners Media, www.jasperwelch.org

Rep. Paul Ryan's Roadmap

In January 2010, ranking Republican Paul Ryan (R-1st District, Wisconsin) set forth a road map for the US Federal budget.  During the 2010 congressional campaign, the budget roadmap that Congressman Ryan authored became a major topic of debate, both among candidates and economists.   It is likely that Represenatative Ryan will become the Chairman of the House Budget committee.   You can link directly to the Roadmap and judge for yourself the plan that Congressman Ryan is proposing.  The voters of the 1st District of Wisconsin support him, as he was easily reelected with 68% of the vote on November 2, 2010.

MADISON, Wis. -- U.S. Paul Ryan of Wisconsin’s 1st Congressional District appeared on Fox News on Sunday to promote his plan for cutting government spending. Ryan is in line to lead the U.S. House Budget Committee, and he said he will try to repeal the president's health care reform bill, calling it a "fiscal and economic train wreck." The Congressman continued, "We have had spending on a gusher," said Ryan. "And if borrowing and spending and taxing and spending actually created jobs and produced prosperity, we wouldn't have all this joblessness. We wouldn't have this lame economy we have right now. So, I think these spending cuts are actually quite modest considering the pickle we are in."   http://www.channel3000.com/ 

As to the role of the House of Representatives in the US Federal Budget process?     It is where all tax and spending bills orginate and with the great debate heading to Washington for America's financial future, watch was happens in the House budget committee under the leadership of Representative Paul Ryan in 2011.   It will be a very different approach to the Obama-Pelosi-Reid spending agenda.   Instead, real reductions in Federal spending will be debated in the Budget Committee.  What a concept! 

(c) Jasper Welch, Four Corners Media, http://www.jasperwelch.org/  

2010 Election Impact on State Legislatures

2010 Election Impact on State Legislatures

From blogging post on The Hill    http://thehill.com/blogs

Republicans took control of at least 19 Democratic-controlled state legislatures Tuesday and gained more than 680 seats, according to the National Conference of State Legislatures. The last time Republicans saw such victories was in 1994, when they captured control of 20 state legislatures. Republicans haven't controlled as many state legislatures since 1928.  Across the country, the map for state legislatures has turned noticeably red as Republicans now control 55 chambers, with Democrats at 38 and the remaining yet to be decided. At the beginning of this week, Democrats controlled 60 of the country's state legislative chambers and Republicans 36.  

From American Thinker  www.americanthinker.com

Republicans now hold 3,735 state legislative seats to 3,119 state legislative seats held by Democrats, a stunning reversal of power from 2006 and 2008. Republicans have more seats in state legislatures than at any time since Reconstruction. These gains in state legislative seats led to a number of state legislative changes flipping from Democrat to Republican. In those 87 state legislative chambers contested on November 2, Republicans captured control from Democrats in at least nineteen chambers. In stark contrast, Democrats failed to gain a single state legislative chamber from Republicans.

For a map of the State legislatures and shift in balance of power to Republicans (red states), check out the National Conference of State Legislatures.  On their web site http://www.ncsl.org  click on Legislatures & Campaigns & State Vote.

This seismic shift in state legislatures from Democrat control to Republican control is the most significant in the last 70 years.

So how did it go in Colorado and New Mexico?   In New Mexico, under the leadership of House Minority leader Representative Tom Taylor (R-Farmington), the Republicans picked up 8 House seats to gain a total of 33 as compared to 37 Democrats.    Not a majority, but the GOP has a strengthened hand as the minority going forward with the new Republican Governor Susana Martinez.    The NM State Senate is not up for re-election until 2012, when their present 4 year terms expire.

On Colorado, the Republicans picked up enough seats to gain a single seat majority (33 to 32), with the new speaker of the House Frank McNulty (R-Highlands) and a split on the Joint Budget committee (3 Republicans and 3 Democrats) who will preside over recommending $1 Billion in cuts to a $19B budget for FY 2011/12.  The Colorado State Senate has 20 Democrats and 15 Republicans, with Ellen Roberts (R-Durango) being the single GOP pickup.

            Finally the most significant aspect of the shift in the balance of power in state legislatures in that the Republican majorities will oversee redistricting in states based on the 2010 census.    This will give the GOP an advantage at the state level (and presidential level) over the next 10 years.

© 2010, Jasper Welch, Four Corners Media, www.jasperwelch.org

What a Difference an Election Day Makes

What a Difference an Election Day Makes


Election Day 2010 in the United States sent a message to Washington and respective state capitals: Enough! Stop the spending, repeal ObamaCare, create policies that encourage jobs and innovation. As US Senator Mitch McConnell said in a speech at the Heritage Foundation http://www.heritage.org ,

"So the voters didn’t suddenly fall in love with Republicans; they fell out of love with Democrats. And while they may have voted to send more Republicans to Washington, they’re sending them here with clear marching orders: stop the big-government freight train and respect the will of the people who sent you there." Mitch McConnell, R-Kentucky

So what happened? As we know, the President is still determined to push through his progressive (i.e., left wing Democrat) agenda. Despite the overwhelming Republican wins in the US Congress (60+ seats picked up by GOP, including the majority), some Democrats are attributing the resounding defeat at the polls in November 2010 as failure to communicate the American people. Instead of recognizing the rejection of ill-fated and wrong-headed policies of the Democrats over the past two years that were rammed through by the Obama-Pelosi-Reid trifecta, the President and his allies just don’t get it. Americans are sick of the spending, the overreaching of their national government and creation of America in the image of socialized Europe.

With excellent insight and with the power of a strengthened hand (GOP controlled House, a stronger Republican minority in the US Senate, combined with a weakened President, Mitch McConnell (R-Kentucky) stated:

"But, as I see it, the White House has a choice: they can change course, or they can double down on a vision of government that the American people have roundly rejected. If they choose the former, they’ll find a partner in Republicans. If they don’t, we will have more disagreements ahead.
“The formula is simple, really: when the administration agrees with the American people, we will agree with the administration. When it disagrees with the American people, we won’t. This has been our posture from the beginning of this administration. And we intend to stick with it. If the administration wants cooperation, it will have to begin to move in our direction.
“There is no reason we can’t work together to prevent a tax hike on small businesses. There’s no reason we can’t work together on energy independence, cutting spending, or increasing American exports by completing free trade agreements. And we can continue to work together to give our armed forces in Afghanistan, Iraq and around the world whatever they need to accomplish their mission." Mitch McConnell

More info on the Republicans in the US Senate: http://republican.senate.gov/public

And for the policy wonks among us, the Heritage Foundation has suggested their Solutions for America http://www.heritage.org/Research/Projects/Solutions-for-America that summarizes the electoral mandate by the center/right American voters on November 2010.

© 2010, Jasper Welch, Four Corners Media, www.jasperwelch.org

Congressional Cheat Sheet

Congressional Cheat Sheet

For those of you who are really into how these elections turn out, you may want to check out the final “cheat sheet” from Hot Air on the Congressional races.    http://hotair.com   Each Congressional race is ranked 1, 2, 3….through the 100’s as to how likely the seat will switch parties (from R to D, or D to R) in the 2010 election.   For example, John Salazar is ranked 43^rd most likely (out of 435) to loose his seat (switch from D to R).

The prediction from the political pundits and pollsters ranges from 40 to 70 seats that will switch from Democrat to Republican.   A net gain of 39 seats is needed by the Republicans to gain control of the “people’s house”.  

As for Colorado and New Mexico, here are likely “switch” ranking numbers.   The lower the number, the more likely the seat is to switch (the incumbent, in these two states the are Democrats) to the other party:

New Mexico:   NM-1:   Incumbent,  Martin Heinrich, D-NM 1^st   Rank=82

                        NM-2: Incumbent, Harry Teague, D-NM 2^nd  Rank=26

                        NM-3: Incumbent, Ben Lujan, Jr. D-NM 3^rd  Rank=117

Colorado:  Colorado 3: Incumbent, John Salazar, D-Colo 3^rd  Rank=43

                  Colorado 4: Incumbent, Betsy Markey, D-Colo 4^th  Rank=10

                  Colorado 7: Incumbent, Ed Perlmutter, D-Colo 7^th  Rank=96

And for those of you that would like a map to see the results, try this web site:

http://www.electoral-vote.com

Enjoy the election outcomes!

© 2010, Jasper Welch, Four Corners Media, www.jasperwelch.org  

Election Day 2010

Election Day 2010

In the United States, we still are able to vote on a regular basis as a self governed people.    Today, American across the country will finish voting for candidates seeking to serve the people at the local, state and Federal level.   In most states, early voting is allowed, which means the voting process has been going on for 2 to 3 weeks, with the final window to vote occurring today, Tuesday November 2^nd.

            In Colorado and New Mexico, there are competitive races up and down the ballot.   Some of the more interesting to watch:   The 3 way race for Governor of Colorado has the Democrat Mayor of Denver (Hickenlooper) trying to hold off a surging third party bid by a former Republican Congressman (Tancredo), while a the Republican nominee (newcomer Maes) has sunk to single digits in polling.  In northern New Mexico, a conservative Tea Party Republican (Tom Mullins) is challenging a well known Hispanic family dynasty (Lujan) for the 3^rd Congressional seat.  Scott Tipton is positioned to win his Republican bid for the 3^rd Congressional seat in Colorado, a likely upset win over incumbent Democrat John Salazar.

In Durango, long time conservative rancher JPaul Brown is running a decent campaign against newcomer Democrat and professional environmentalist (O’Donnell) for the 59^th state legislative seat.   And well respected state Representative Ellen Roberts is challenging the appointed state Senate Democrat Bruce Whitehead for the 6^th Senate District in southwestern Colorado.   Other races of note are La Plata County Commissioner, where my friend Bobby Lieb should out distance a Democrat and independent to win a seat on the Commission.  And in San Juan County, NM, the popular Margaret McDaniel is running a strong campaign for County Commissioner in an historically Navajo dominated district.   Her chances are better that 50-50% that she could win over the Democrat.

            The new governor of New Mexico is likely to be Susana  Martinez, a conservative Republican from southern New Mexico, who has run a successful campaign against the NM Democratic machine.    All three Congressional seats in New Mexico are competitive, with Republican pick-ups likely in 2 of the 3 races.

            At the national level,  the voters are fed up with big government, runaway spending and Obamacare.    Essentially, the Congressional races are a referendum on Obama, Pelosi and Ried and their Democrat policies that have not been working.   With the economy stuck in the mud due to poor public and tax policy, the voters are throwing the bums out and giving the Republicans another chance.    But with the volatile political climate of the past several years as a backdrop, whoever is governing better get it right, or they too will be voted out of office next time around.

            So today is your final day to vote.   Make it count!

© 2010, Jasper Welch, Four Corners Media, www.jasperwelch.org