Obama proposes direct aid to local governments

September 9, 2011

Obama proposes direct aid to local governments

Among the proposals made by President Obama in his jobs speech last night was his call for the federal government to fund the costs of public school teachers, firemen, policemen and first responders fully. This appears to be the only direct cash subsidy for jobs in his plan.

The American Jobs Act, if enacted by Congress, would specifically allocate $30 billion in funds for teachers and $5 billion would support the hiring and retention of public safety and first responder personnel. Using 2010 Census data this would provide a subsidy of approximately 12% to local governments for their elementary and secondary educator’s expenses and 8% for police and firefighters. The 2009 Recovery Act allocated $47 billion to local governments for teacher salaries so this proposal is about 40% less.

President Obama’s plan also includes “$25 billion investment in school infrastructure that will modernize at least 35,000 public schools.” While sounding good it’s important to point out this would give each school about $715,000 in funds for renovations. It’s helpful but not really a substantial amount.

Several economists are out lauding the large impact in gross domestic product the plan will have. For muniland the proposal is helpful but not earthshaking. Of much greater fiscal importance will be the changes the President and supercommittee propose for Medicaid. Stay tuned.

State tax collections up 11% for 2Q over last year

Although the national economy continues at stall speed, state tax collections are rocketing ahead. From the Rockefeller Institute:

The Rockefeller Institute’s compilation of data from 46 early reporting states shows collections from major tax sources increased by 11.4 percent in nominal terms in the second quarter of 2011 compared to the same quarter of 2010. This is the strongest year-over-year growth since the second quarter of 2005. Tax collections now have been rising for six straight quarters, following five quarters of declines. However, revenues were still 7.8 percent lower in the second quarter of 2011 than in the same period three years ago.

The hottest thing in online government

Govgirl.com is the face of new, updated and efficient government. What a delight to find Kristy Fifelski who is the Web Manager for the City of Reno, Nevada and a first class muniland evangelist. See Kristy talk about the pitfalls of advertising on government websites. (Hat tip Government Technology)

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