Tag Archives: State Expenditures

Illinois’s State Budget Impasse

Passing the annual budget is often a difficult task for state governments, particularly during lean fiscal periods. Over the past few months, Illinois has found resourceful ways to avoid a complete government shutdown after not passing their annual state budget.

The state is making its way through the second month of the fiscal year without a budget. Previously created laws and court decisions require funding to continue for about 80% of state spending, including paying state employees and Medicaid bills. However, many of Illinois’s economic incentive programs have been suspended as the state deals with no full year plan for spending.

Governor Rauner wanted a substantially reduced budget compared to what was passed by the General Assembly in June. The General Assembly’s proposed budget had revenue increases to fix the state’s current deficit, which Governor Rauner was open to if changes were made to workers’ compensation, civil lawsuit damage award limits, and public union bargaining and contracting rules, as well as a freeze on property taxes. Two months later, neither side seems much closer to an agreement. A small sign of progress occurred August 12 when the State House agreed unanimously to free $5.2 billion in federal funding that had been unavailable since July 1st because no budget has been passed.

While the federal funding will help, 20 percent of recently surveyed state social service providers will run out of money in the next few weeks. Along with economic development programs, state universities are also part of the list of organizations not getting funding. ReBoot Illinois has created a continually updating map of people and organizations that have been impacted by the budget impasse.

Newly-elected Governor Bruce Rauner has wrestled with how best to handle state business incentive programs. In April, the Rauner administration lifted the spending freeze it placed upon $100 million in business tax incentives for the state’s Economic Development for a Growing Economy (EDGE) program. The EDGE program provides tax credits to corporations to encourage the businesses to expand their operations in Illinois. To help reduce the state’s current deficit of $4 billion, at the start of June Governor Rauner suspended the application process for any future economic incentives used to attract and grow businesses. These programs have yet to be reactivated.

Illinois’s unusual situation is risky for the state’s economic future if funding for key state economic growth programs continues to stay low. The state’s credit rating will likely be downgraded soon and Illinois was recently ranked last in financial health by the Mercatus Center at George Mason University. Although no end appears to be in sight, Illinois will eventually have to pass a budget or else face running out of money completely. Until then, the future of Illinois’s business incentive and other economic development programs remains uncertain.

State Economic Development Program Expenditures: FY2014-FY2016 Update

The Council for Community and Economic Research (C2ER) has updated its State Economic Development Program Expenditures Database as part of a continuous effort to track investments in economic development across all fifty states. The database now includes all Governor Recommended Budgets for fiscal year 2016. Read the full report on this update here.

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According to the Database, in FY2016 U.S. states are collectively proposing to spend $6.97 billion on economic development investments, representing a slight dip from FY2015 spending levels. In FY2015, states appropriated $7.05 billion for economic development, which was a 7 percent increase over actual economic development spending of $6.65 billion in FY14. Continue reading

Annual Versus Biennial Budgeting

Users of the C2ER Economic Development Program Expenditures Database may notice differences in how frequently the budget for each state is released. This is because states have the choice of using either annual or biennial budgets, meaning budgets released every two years. Therefore, some states will not release their proposed budget for an extra year, or will not release actual budget numbers for more than two years. A number of factors go into why a state decides to use an annual or biennial budget. Continue reading

States propose funding apprenticeships

apprenticeship picAs data from the proposed FY2016 State Budgets are released, C2ER has been updating the C2ER State Economic Development Program Expenditures Database. As C2ER staff review the state budgets that have been released over the past few months, they have been looking for investments in apprenticeship programs.

Here are highlights from Connecticut, Iowa, and Maryland:

  • Connecticut’s proposed FY2016 apprenticeship funding is fairly consistent with FY2015 and FY2014, proposing approximately $575,000 in general fund expenses for the program.
  • Iowa proposed a 9% funding increase for FY2016 for the Iowa Apprentice Program, which is administered by the Iowa Economic Development Authority in coordination with the Office of Apprenticeship at the US Department of Labor. The program was created with the Iowa Apprenticeship Act in 2014.
  • Maryland significantly increased funding from FY2014 to FY2015, with a 60% in state funding allocated to the apprenticeship program. FY2016 included a proposed estimated 6% increase in state funding.

For more information and updates, visit the C2ER State Economic Development Program Expenditures Database. Please note that updates will not appear to users until all FY2016 state updates are complete in June 2015.

FY 2016 Proposed State ED Budget Cuts

As data from the proposed FY2016 State Budgets are released, C2ER has been updating the C2ER State Economic Development Program Expenditures Database.  The proposed budgets provide information on eliminated programs and decreased funding for economic development financing, with many affecting small business development related programs.

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State Initiatives in International Markets

According to the C2ER State Economic Development Expenditure Database, international trade and investment is among the fastest growing economic development functional areas. C2ER defines the international trade and investment function as program activities  involving export promotion, international marketing and recruitment, foreign direct investment assistance, and an array of programs aimed at building stronger economic ties between states and other parts of the world.

Int1Since 2012, states have increased their program expenditures in international trade and investment from $61 million in FY 2013 to $75 million in combined proposed spending for FY 2015 – a 23 percent increase. This rise in investment can possibly be connected with the successes of the Small Business Administration’s State Trade Export Promotion (STEP) Grant Initiative, a 3 year pilot program which uses matching-fund grants to assist eligible employers in becoming engaged in the international marketplace. Essentially, the grant subsidizes the marketing costs states accrue in advertising their businesses’ goods and services internationally. Continue reading

Funding Highlights From Proposed FY2016 State Budgets

C2ER staffers are busy digging through the newest proposed state budgets for FY2016. As we update the State Economic Development Program Expenditures Database, a number of programs have stood out. The proposed budgets include new programs as well as some major funding increases in economic development financing, infrastructure and construction, research and development, and employment training. Continue reading

GASB State Tax Incentive Rule

GASB Tax Incentive Picture Beginning in 2017, those interested in incentives and tax abatement expenditures spending will likely have access to significantly more data than is currently available. The Governmental Accounting Standards Board (GASB), the independent organization which “establishes financial accounting and reporting standards for state and local governments,” is asking for public comments on a proposed change to current standards for property and tax abatement agreements. Continue reading

Examining Historic Tax Credits

An old shoe factory in St. Paul is transformed into an LEED-certified affordable housing structure. Across the river in Minneapolis a disused library building becomes a neighborhood career and technology center. These are just two of the projects benefiting from the Minnesota Historic Structure Rehabilitation State Tax Credit. Continue reading

State Economic Development Expenditures: FY2015 Update

The Council for Community and Economic Research (C2ER) recently updated its State Economic Development Program Expenditures Database as part of a continuous effort to track investments in economic development across all fifty states. The database now includes all Governor Recommended Budgets for fiscal year 2015.

Continue reading