economy picking up

[strandinthewind]

States take in record $600B

By Dennis Cauchon, USA TODAY

State government revenues are soaring again, ending a period of budget shortfalls and prompting proposals for tax cuts and new spending initiatives for the first time since 2000.

Tax collections rose to a record $600 billion in the states last year, up 7.2% over 2003, the biggest increase since 2000. The money is rolling in even faster this year as many states report double-digit revenue increases through April.

The most immediate effects of improving state finances across the USA are college tuition hikes that were smaller than expected, pay raises for government workers and less borrowing. The big decisions — tax cuts vs. major new spending — are starting to brew in most legislatures but won't be decided until late this year or early 2006.

Many governors and legislatures are reacting cautiously to the rising revenue, approving mostly small new spending proposals and tax cuts. Arizona funded a new medical school. Utah boosted its tourism promotion budget. Idaho plans to give a 1% bonus to teachers and other public employees.

The reversal of fortune ends what the National Governors Association had called the states' worst economic situation in 60 years.

"We've come a long way, baby," says Massachusetts Gov. Mitt Romney, a Republican. He faced a $3 billion budget shortfall during his first year in office in 2003. Now, his state is on track for its second straight year of surpluses. He wants to use about half the surplus to cut the state income tax to 5% from 5.3%.

About 30 states are still working on budgets for the fiscal year that begins July 1.

"Nearly every state is at or above what they expected to get in revenues," says Arturo Perez, a budget analyst at the National Conference of State Legislatures.

He says many states were stunned by an "April surprise" of unexpectedly large tax collections. April is the most crucial month for state revenue — like December for retail stores — because that's when income taxes are due. California, Pennsylvania, Arkansas, Idaho and Vermont are among many states enjoying unanticipated windfalls.

In another sign that hard times are over, states borrowed 23% less in the first four months of 2005 than a year earlier, according to The Bond Buyer, a newspaper that tracks government finance. States borrowed record amounts in recent years to balance their budgets.

Find this article at:
http://www.usatoday.com/news/nation/...-revenue_x.htm

[strandinthewind]

Here is a related story:

States find wiggle room in budgets

By Dennis Cauchon, USA TODAY

Ohio is considering a major overhaul of its tax system. California is borrowing less. Connecticut expects to continue health care for 13,000 working parents who were set to lose coverage.

A rush of money into state budgets is reshaping what's happening in legislatures across the USA. (Related story: Record $60B revenue for states)

For the first time in five years, legislators are doing more than scrambling to balance budgets when tax collections fell short of projections.

This year, legislators are directing most new money to crucial but unspectacular spending: aid to local governments, grants to school districts and budget reserve accounts.

On a smaller scale, they are nourishing pet projects that were ignored during hard times from 2001 to 2003. New road projects and class-size reductions are popular spending items. Business tax cuts are common, too.

Seven of 15 states surveyed by USA TODAY reported that tax collections have grown more than 10% so far in this budget year. The geographically diverse survey covered 46% of the U.S. population.

States continue to face long-term financial pressure from the soaring cost of Medicaid, the state-federal program that provided medical insurance for 57 million low-income people last year. State spending on Medicaid rose 8.1% to $119 billion in 2004, according to the Centers for Medicare and Medicaid Services.

How this year's extra money is affecting states:

•Arizona. Democratic Gov. Janet Napolitano got what she wanted in the new budget: money for a new medical school in Phoenix and expansion of all-day kindergarten. Republican legislators got what they wanted: a business property tax cut and money for sex-abstinence education.

The budget was full of projects seldom seen in hard times: $20 million to recruit nurses, $30 million to build a state archives building and a tax cut for moviemakers who film in the state.

•Nebraska. The Legislature didn't raise taxes for the first time in four years. Spending will rise 7.8% next year. Education and health care programs benefited. State employees got a 3% pay raise. More state troopers will be hired. Legislators approved a $15 million job-training program and several business tax breaks.

Nebraska is so flush with money that it plans to pay a $145 million legal judgment out of its surplus and still have enough left over to fatten a cash reserve to guard against tough times.

"If we didn't have that $145 million settlement — holy cow! — our finances would be amazing," says Michael Calvert, director of the Nebraska Legislative Fiscal Office. "Even with it, our financial outlook is very good."

•Ohio. The Republican-controlled Legislature is trying to use the budget — bolstered by a 7% increase in tax collections — to overhaul the state's tax system for the first time in 34 years.

Republican Gov. Bob Taft and legislative leaders want to cut the income tax by 21% and eliminate the property tax on business equipment. In return, the state sales tax would rise from the 5% rate scheduled for next year to 5.5%, and a new tax would be imposed on businesses' sales to other businesses.

Other proposed changes: Workers earning less than $10,000 would pay no state income tax, alcohol and cigarette taxes would rise, and a new tax on real estate sales would be imposed.

"Our goal is to transform and revitalize Ohio's economy," Ohio House Speaker Jon Husted says. "Conservatives believe this is the way to go: Emphasize taxes on consumption, and reduce taxes on income and investment."

•California. The state expects to collect $4.2 billion more in taxes through June 2006 than it estimated as recently as four months ago. The extra money comes from a jump in income taxes attributed to profits Californians made selling stocks and stock options.

Republican Gov. Arnold Schwarzenegger wants to use the money to borrow $1.9 billion less than planned and spend $2.3 billion on transportation, repaying money owed to cities and restoring a property tax cut for senior citizens. Democratic legislators are pushing for higher taxes to reduce borrowing and increase spending for education and other programs.

Despite robust tax collections, California remains in dire financial shape. It has borrowed $26 billion to finance recent deficits and delayed making billions of dollars in legally required payments to cities, schools and others.

Even with record tax revenue, the state faces a $4.7 billion budget deficit next year. An independent state commission granted legislators a 12% pay increase this week, boosting their annual salaries beginning in December to $110,880 — the highest in the nation for state legislators. The increase cannot be overturned by legislators or the governor, but Schwarzenegger said lawmakers could refuse to accept it.

"California's fiscal mess is a continuing travesty of government," says state Treasurer Phil Angelides, a Democrat, who oversees the state's borrowing and plans to run for governor in 2006. "Other states faced their financial problems and are reaping the benefits today."

•Missouri. Health care costs continue to plague states. Missouri legislators eliminated medical coverage, starting July 1, for 90,000 of the 1 million people on Medicaid. The changes will save an estimated $250 million, some of which was transferred to education. Missouri tax collection is up 3.9% this year, among the lowest increases.

Some states are using strong tax collections to keep people on Medicaid. Connecticut Gov. M. Jodi Rell, a Republican, backed off a plan to remove 13,000 adults from Medicaid because of higher tax collections. Tennessee Gov. Phil Bredesen, a Democrat, agreed to keep insuring 97,000 of the 323,000 people he had threatened to cut from the program.

The Congressional Budget Office reports that, despite threatened cuts, states have increased the number of people on Medicaid from 51 million in 2002 to 57 million in 2004.


Find this article at:
http://www.usatoday.com/news/nation/...-budgets_x.htm

[strandinthewind]

I think this is good news and somewhat unsurprising considering I posted a similar article about Georgia's boon awhile back.

I think this is a clear demonstration the economy on the whole is improving. I also think it is good news because IMO and in Greenspan's opinion (which is worth way more than my opinion ) - the Bush Admin. squandered the spark created by the Federal Income Tax cuts by borrowing far more money than was wise and with little hope of paying that enormous debt back in the next twenty years, despite W's promises of a booming economy, which has yet to see its fruition despite being promised to happen a few years ago.

Thus, I think the boost in the economy is cyclical and unrelated to W and his Admin.'s self-created fiscal nightmares that could only serve to have hampered what this boon could have been. In other words, as I tell a friend of mine often - I am glad you made $10 today, but you borrowed $20 to do it

[GypsySorcerer]

Originally Posted by strandinthewind

I think this is good news and somewhat unsurprising considering I posted a similar article about Georgia's boon awhile back.

I think this is a clear demonstration the economy on the whole is improving. I also think it is good news because IMO and in Greenspan's opinion (which is worth way more than my opinion ) - the Bush Admin. squandered the spark created by the Federal Income Tax cuts by borrowing far more money than was wise and with little hope of paying that enormous debt back in the next twenty years, despite W's promises of a booming economy, which has yet to see its fruition despite being promised to happen a few years ago.

Thus, I think the boost in the economy is cyclical and unrelated to W and his Admin.'s self-created fiscal nightmares that could only serve to have hampered what this boon could have been. In other words, as I tell a friend of mine often - I am glad you made $10 today, but you borrowed $20 to do it

Just as with everything else, W is a nightmare fiscally. But I'm sure he'll take full credit.

[strandinthewind]

Originally Posted by GypsySorcerer

Just as with everything else, W is a nightmare fiscally. But I'm sure he'll take full credit.

I think the economy is cyclical in nature and a sitting Pres. can influence it, but only so much. So, for a pres. to take full credit for a booming economy is somewhat wrong, be that Pres. a D or R. I also think the housing market coupled with low interest rates is what drove this market and continues to do so. Overall, the housing market continues to boom as does the mortgage market of which the housing sales market is a subset. I think the slightly high mortgage interest rates have put a dent in the housing market, but IMO that dent has not affected the growth too much because though higher rates usually limit the purchase price of a house or the amount refinanced (equity out or not) - lenders have a wider arrray of specialty loans to choose from these days. So, we shall see where this will land. It is rumord rates will continue to rise and that the housing market is settling (it sure has in Atlanta for just about everything but new condo construction in Midtown) and that the housing bubble is about to burst - partially because of the expected higher rates. So, we shall see. But, so far so good with the gradually recovering economy.

[ShangriLaTroubl]

That is good news, regardless of who is the cause I say

Chris

[BTFLCHLD]

[dissention]

Originally Posted by BTFLCHLD

LMAO

I love it.

[strandinthewind]

Originally Posted by BTFLCHLD

I LOVE you for that

[BTFLCHLD]

[BTFLCHLD]

[irishgrl]

Originally Posted by strandinthewind

•California. The state expects to collect $4.2 billion more in taxes through June 2006 than it estimated as recently as four months ago. The extra money comes from a jump in income taxes attributed to profits Californians made selling stocks and stock options.

Republican Gov. Arnold Schwarzenegger wants to use the money to borrow $1.9 billion less than planned and spend $2.3 billion on transportation, repaying money owed to cities and restoring a property tax cut for senior citizens. Democratic legislators are pushing for higher taxes to reduce borrowing and increase spending for education and other programs.

Despite robust tax collections, California remains in dire financial shape. It has borrowed $26 billion to finance recent deficits and delayed making billions of dollars in legally required payments to cities, schools and others.

Even with record tax revenue, the state faces a $4.7 billion budget deficit next year. An independent state commission granted legislators a 12% pay increase this week, boosting their annual salaries beginning in December to $110,880 — the highest in the nation for state legislators. The increase cannot be overturned by legislators or the governor, but Schwarzenegger said lawmakers could refuse to accept it. (YEAH, LIKE THAT'S GONNA HAPPEN)

"California's fiscal mess is a continuing travesty of government," says state Treasurer Phil Angelides, a Democrat, who oversees the state's borrowing and plans to run for governor in 2006. "Other states faced their financial problems and are reaping the benefits today."

California continues to be the exception to the rule when you tout sunny economic recovery news. Unfortunately, since California has the worlds 5th or 6th largest economy, this is important news. California is the produce supplier for most of the US, as well as overseas. The sad fact of the matter is, Ahnuld is more concerned with fund raising for GOP than he is about making real changes. His only answer seems to be taking everything to a special election (in an of itself, not such a bad idea, but when it is used as Arnie is using it, to circumvent legislators who are against his policies, it is a waste of taxpayer monies)

[irishgrl]

Originally Posted by strandinthewind

I also think the housing market coupled with low interest rates is what drove this market and continues to do so. Overall, the housing market continues to boom as does the mortgage market of which the housing sales market is a subset. I think the slightly high mortgage interest rates have put a dent in the housing market, but IMO that dent has not affected the growth too much because though higher rates usually limit the purchase price of a house or the amount refinanced (equity out or not) - lenders have a wider arrray of specialty loans to choose from these days. So, we shall see where this will land. It is rumord rates will continue to rise and that the housing market is settling (it sure has in Atlanta for just about everything but new condo construction in Midtown) and that the housing bubble is about to burst - partially because of the expected higher rates. So, we shall see. But, so far so good with the gradually recovering economy.

I can tell you that just 12 miles away from me, in beautiful rural Chico, the housing prices (in terms of inflated value/earnings potential) are the highest in the nation. See last month's issue of Readers Digest for exact numbers.

The low interest rates IMO are thanks to Alan Greenspan who is determined not to let the sluggish economy hamstring the ability of people to function (ie, own homes.) Actual unemployment is UP and companies are downsizing and outsourcing and it is harder and harder for the average American to get by...especially on ONE income (like I am doing) I have a hard time being jubilant about the inrease in the economy being due to increased TAXES....something is not right with that picture...maybe it is a change in the law that benefits corporations and penalizes shareholders? Im not sure, but I dont know that it passes the "smell test"

[strandinthewind]

Originally Posted by irishgrl

I can tell you that just 12 miles away from me, in beautiful rural Chico, the housing prices (in terms of inflated value/earnings potential) are the highest in the nation. See last month's issue of Readers Digest for exact numbers.

The low interest rates IMO are thanks to Alan Greenspan who is determined not to let the sluggish economy hamstring the ability of people to function (ie, own homes.) Actual unemployment is UP and companies are downsizing and outsourcing and it is harder and harder for the average American to get by...especially on ONE income (like I am doing) I have a hard time being jubilant about the inrease in the economy being due to increased TAXES....something is not right with that picture...maybe it is a change in the law that benefits corporations and penalizes shareholders? Im not sure, but I dont know that it passes the "smell test"

increase in jobs/pay = increase in income = increase in tax revenue

BTW - you will not die of shame if you admit the economy is getting better, which it clearly is throughout the nation. BTW - if housing proces are so high in your area - who is buying them - must be people with a job. I mean the market charges what the consumer will pay I submit that weakens you argument. But, I know you will never ever under any circumstances admit that anything good is happening during W's adminitration no matter whether it is his doing or not and no matter what the facts say, like the facts in the articles above.

[Sapphire Girl]

Originally Posted by BTFLCHLD

That's interesting how you put George W. Bush's head on dissention's body.