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Begin New Search Topic Fiscal Policy Political Geography United States

1. Alaska: Arctic Groundhog Day

Author:
Glenn Wright and Tasha Elizarde
Publication Date:
01-2019
Content Type:
Journal Article
Journal:
California Journal of Politics and Policy
Institution:
Institute of Governmental Studies, UC Berkeley
Abstract:
Since the early 1980s, Alaska has relied on oil taxes for almost all of its state government revenue. Like many resource-based economies, including many of the Western states, the result is a boom and bust economy. With production declining and the price of Alaska’s North Slope crude around $75 per barrel, the state is in a bust cycle, with a large state government deficit. Although Alaska is experiencing a somewhat improved revenue outlook compared to 2017, the state’s executive and legislative branches continue to wrestle with unpopular political choices; do we implement a state income tax, tap the state’s Permanent Fund sovereign wealth fund (and thereby reduce or eliminate Alaska’s annual Permanent Fund Dividend payment to Alaskan residents), or some combination of those two approaches? In Spring 2018, the Alaska State Legislature—supported by Independent Governor Bill Walker—chose the first of these options, tapping Alaska’s Permanent Fund to fund state government operations for the first time. The result is a dramatically improved fiscal position for 2019, and although the state remains in deficit, chances of a balanced budget are much improved. Use of the Permanent Fund has not been popular, however; a number of incumbents who supported the use Permanent Fund earnings were defeated in November 2018 by opponents who campaigned on the issue. At the moment, Alaska’s fiscal future remains in doubt.
Topic:
Governance, Budget, Economic Policy, and Fiscal Policy
Political Geography:
United States and Alaska

2. Arizona: #RedforEd -- Governor Ducey Forced to Invest in Education

Author:
David Wells
Publication Date:
01-2019
Content Type:
Journal Article
Journal:
California Journal of Politics and Policy
Institution:
Institute of Governmental Studies, UC Berkeley
Abstract:
The FY2019 budget saw the country’s largest movement of teachers descend on the state capital and force Governor Doug Ducey to scramble to save his re-election prospects. Gradually growing through social media, the #RedforEd movement culminated with 50,000 teachers and supporters walking out of classrooms and descending onto the Capitol grounds. Gov. Ducey deftly rose to the occasion from his initial one percent raise to a 20 percent raise by FY2021 before the walkout commenced, moving the pressure to legislators to seal the deal, which they did on May 3, 2018. Stronger revenue growth than prior years enabled the governor and Legislature to find the necessary funds.
Topic:
Education, Fiscal Policy, and State Funding
Political Geography:
United States and Arizona

3. New Mexico: The Lost Decade

Author:
Kim Seckler
Publication Date:
01-2019
Content Type:
Journal Article
Journal:
California Journal of Politics and Policy
Institution:
Institute of Governmental Studies, UC Berkeley
Abstract:
In January 2018, the New Mexico State Legislature convened for its regular session, a thirty day budget session, per its constitutional mandate. Thirty days later the legislative session ended quietly and the state of New Mexico closed the book on the great recession and a decade of financial and political strife. The 2018 legislature passed a $6.38 billion dollar budget, re-supplied dangerously low general fund reserves, and provided small raises to teachers and state employees. Oil and gas revenues are up, unemployment is slowly coming down and legislative-executive political battles have muted. The balanced budget, signed by the governor in early March, brings the state back to where it began almost 10 years before, leading one observer to refer to the time as the “lost decade in New Mexico” (Cole 2018).
Topic:
Governance, Budget, and Fiscal Policy
Political Geography:
United States and New Mexico

4. Oregon: Progressive Agenda, Yet Facing Great Fiscal Risks

Author:
Mark Henkels and Brent S. Steel
Publication Date:
01-2019
Content Type:
Journal Article
Journal:
California Journal of Politics and Policy
Institution:
Institute of Governmental Studies, UC Berkeley
Abstract:
The 2018 midterm elections strengthened the Democrats’ control of Oregon’s state government. Governor Kate Brown won re-election with 50percent of the vote defeating moderate Republican Knute Buehler with 46.6percent of the vote. Democrats also increased their seats in both the House and Senate, leading to super majorities in both houses. Governor Brown and the Democrats in Salem have taken fairly strong progressive policy stances in 2017 and 2018, particularly opposing President Trump’s immigration and marijuana policies, reinforcing the West Coast carbon-reduction pattern, and strongly supporting health care coverage expansion. With a booming economy and unemployment at record lows, the state seems to be able to deliver on its progressive agenda for the 2017-19 biennium, but funding progressive policies in the future will be a challenge for the governor for a variety of reasons. The fate of this progressive vision depends on five elements: (1) the continuation of the favorable economy and the corresponding revenue growth in the approaching budget cycle; (2) the ability to manage the ongoing taxing and spending structures that include major obligations for the Public Employees Retirement System (PERS); (3) the constraints of ongoing dependency on income taxes; (4) the vicissitudes of Trump era politics and policy with declining federal funds; and (5) continued public support for expansive public policies.
Topic:
Governance, Domestic politics, and Fiscal Policy
Political Geography:
United States and Oregon

5. Expansionary Austerity and Reverse Causality: A Critique of the Conventional Approach

Author:
Christian Breuer
Publication Date:
07-2019
Content Type:
Working Paper
Institution:
Institute for New Economic Thinking (INET)
Abstract:
In this paper we methodologically review and criticize a broad literature of empirical work on the effects of fiscal policy (the ‘conventional approach’). Beyond previous critiques of this approach, we show that the cyclical adjustment strategy as used in this literature entails erroneous assumptions that necessarily produce flawed results in support of expansionary austerity. Specifically, the cyclically-adjusted primary balance (CAPB) strategy this literature employs fails to correct for cyclical effects in the expenditure- GDP-ratio, so that the estimates of the results of expansionary fiscal consolidation are affected by reverse causality, i.e. increasing GDP causally decreases expenditure-GDP- ratios, rather than vice versa. We provide suggestions on how to fix this incomplete cyclical adjustment problem with a new approach. After replicating two famous articles of the conventional literature and controlling for this bias, the expansionary effects of fiscal adjustments disappear or turn into their opposite
Topic:
Economics, Macroeconomics, and Fiscal Policy
Political Geography:
United States