Stories from the states:
- Yesterday, E.J McMahon and I put out a report from the Empire Center for New York State Policy called "New York's Exploding Pension Costs: How Big is the Bomb? How to Defuse It?" The report exposes that New York State's pension funds, which claim to be approximately fully funded, are in fact $120 billion in the hole. As a result, taxpayer contributions to those funds will nearly triple over the next five years, putting intense pressure on local budgets and crowding out essential services.
- We also have an op-ed about our findings in today's New York Post, complete with a scary bar chart.
- Also in New York, the legislature failed yesterday to strike a deal to bail out New York City's public (and insolvent) Off-Track Betting corporation. As a result, OTB started shutting down at midnight. Rudy Giuliani famously called OTB "the world's only bookie that loses money," but it was unprofitable mainly because the legislature kept forcing it to hand over more and more of its revenues to politically powerful horseracing interests. The Wall Street Journal went to an OTB parlor last week to interview the regulars about what they will do once it is closed; the Journal's video made me briefly regret never having set foot inside OTB.
- Now that elections are over in Illinois, that state's lawmakers are sitting down and finally making the tough decisions that are necessary to bring tax receipts and expenditures into line. Ha ha, just kidding. Actually they're floating $1.5 billion in bonds against future tobacco settlement receipts, conducting a tax amnesty, and talking about building a huge casino in Chicago.
- Over the weekend, Steven Greenhut wrote for the San Francisco Examiner about one pension gaming trick in California: white-collar workers like lawyers and auditors are increasingly being classified as "public safety" workers, so they can qualify for more generous pensions. He discusses reforms that could be enacted, like most everything else in California, through ballot initiative.
- The Washington Post weighs in with a spot-on editorial in favor of Devin Nunes' pension transparency bill and against the Public Safety Employer-Employee Cooperation Act, which would force states and localities to collectively bargain with police and firefighters. It's heartening how thoroughly some center-left editorial boards (particularly the Post and the New York Daily News) have come around to skepticism of public employee unions' policy agenda.
- The Municipal Securities Rulemaking Board is considering reforms to improve transparency in the municipal bond market, but issuers are opposed.
- The OECD has a new Tax Policy Brief with recommendations for tax reforms to improve economic growth. Mostly, they involve taxing consumption instead of income and broadening tax bases so that rates can be as low as possible. OECD also recommends the use of Pigovian taxes that can both raise revenue and achieve environmental objectives. These recommendations are intended for countries but could apply equally to states considering tax reform.