The declining welfare rolls
The ever-shrinking welfare rolls
Stateline has done some very good reporting on the decline of the welfare rolls. Welfare funding was switched to block grants in 1996, and the funding level has remained the same since then. From Stateline:
Welfare is not a big budget item for most states, taking up less than 2 percent of all state spending, according to the National Association of State Budget Officers (NASBO)…
…When Congress overhauled that system in 1996, it changed welfare from an “entitlement program” guaranteeing coverage to everyone who was eligible and instead created the Temporary Assistance for Needy Families (TANF) block grant that hands out lump-sum payments for welfare. States are essentially given a set amount of money and allowed to use it as they wish. The amount has stayed level since 1996.
The TANF system is believed by many to have saved governments a considerable amount of money. Nationwide, the average monthly number of welfare recipients fell from 12.8 million prior to the enactment of TANF to 4.4 million by September 2010, a decrease of more than two-thirds, according to NASBO.
A recent editorial by Peter Ferrara of the Carleson Center for Public Policy and Phil Kerpen of Americans for Prosperity claimed that in real dollars, total federal and state spending on welfare dropped 31 percent from 1995 to 2006. They called block-granting welfare “wildly successful” and argued that applying block grants to Medicaid “portends huge potential gains for taxpayers and the poor.”
Low number of muniland bankruptcies
According to the Municipal Securities Rulemaking Board’s EMMA system, muniland has had two bankruptcies in the past month. The larger one is some high-end condominiums called Linden Ponds that were built outside of Boston. This default was in the amount of $156 million and the issuer was the Massachusetts Development Finance Agency. I wrote previously how unreasonable it was for this project to be financed as a “municipal” bond. It is housing for well-to-do people, and it is unclear why the public should have given the project tax-exempt status. The other bankruptcy was for $11.7 million in “dirt” bonds that were used to finance a development of 240 lots in Okaloosa County, Florida. This is clearly not a “municipal” project.
Thankfully no governmental body is on the hook for either of these bankruptcies. It’s also interesting that both were filed as Chapter 11, which is for corporations, rather than Chapter 9, which is used for municipal bankruptcies.
Cha-ching! Gambling revenues flow to states
Excellent short piece in the Wall Street Journal about the growing revenues to states are receiving from gambling. They reference a report from Nelson A. Rockefeller Institute of Government.
Other states, though, have begun to lean ever more heavily on gambling — especially in tough times. At least 10 states enacted measures to expand gambling in the wake of the Great Recession, according to the Rockefeller Institute. Gambling revenues have grown about 4% on average over the past decade or so — from $15 billion in 1998 to $24 billion in 2008 — as states have expanded all forms of gambling in lieu of raising more traditional taxes.
Over the 1998 to 2008 period, gambling has accounted for between 2.1% and 2.5% of states’ overall tax revenues. Not surprisingly, it accounts for the largest share of the budget — 12.5% — in Nevada.
Chris Christie’s confusion
The New Jersey Assembly yesterday approved substantial changes to public pension plans. It’s a little unclear what the future savings will be exactly. Governor Christie claimed to Matt Bai of the New York Times that reforms will reduce unfunded future liabilities by $132 billion. But Reuters has estimated that New Jersey’s unfunded pension liabilities are only $37 billion, so there seems to be a little confusion regarding Governor Christie’s claims. Stay tuned and we will try and sort it out.
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