Jan 30th 2019 | Posted in Mary Scott Nabers' Insights, Opportunities by Mary Scott Nabers

While most people are preparing to file tax returns, elected officials throughout the country are looking at government coffers and evaluating whether they will raise taxes. They are also making decisions about how to spend funding that has not been available to them in the last few years.

In the last decade since the financial recession, states have been fiscally restrained and elected officials, particularly legislators, have cut spending, forced reductions in staffing, deferred major maintenance and repairs, put large projects on hold and cut back on any funding that once flowed to local governments.

Cities, counties, school districts, hospitals, universities and water districts have been forced to make do with less funding. Not only did these governmental entities lose federal funding that once was common, but they have also been forced to compensate for reduced state funding that was also once common. To the surprise of some, it appears that change is about to occur.

As of today, tax revenue flowing into state coffers is higher than was anticipated and 36 of 50 states are collecting tax revenue that is comparable to what was being received before the recession.  Public officials in those states are now being pressured to catch up on investments and spending that have been postponed for many years since the economic downturn.

A loosening, rather than a restraining of revenue, may be occurring at the state level throughout the country.  Legislators have already enacted appropriation increases for fiscal 2019 totaling $41.1 billion across all program areas.  That compares to just $12.7 billion in new appropriations enacted in fiscal 2018.

With the exception of New York, whose fiscal year ends on March 31, and Texas, whose fiscal year ends Aug. 31, most states are discussing budget expansions for the next fiscal year. That should result in increased funding to local governments, job creation and economic stimulus which would generate even more tax increases in the future.

New York’s tax collections, unlike most other states, are down for the year. Yet, it appears that lawmakers will expand the state’s budget by about $176 billion.  That’s a 2 percent spending increase over the current fiscal year and the budget is expected to include funding for numerous major projects. The governor said the state will invest $2.5 billion for clean water infrastructure and has proposed $150 billion for other infrastructure projects over the next five years. That amount includes $66 billion for transportation and $9 billion for affordable housing.

This month, as the Texas Legislature convened, the Comptroller of Public Accounts increased revenue estimates to $9 billion.  That’s an 8 percent increase. The state could have $119.12 billion to spend in the next biennium.  Legislators are currently heavily focused on funding for education but infrastructure funding is also being discussed. Other anticipated spending includes more than $1 billion for disaster recovery funds for Hurricane Harvey-related damages. Both the House and Senate are proposing a 1.5 percent spending increase over last year to the Health and Human Services agency, but that includes federal funds. The net result is a decrease of about 3.2 percent. Many constituents and citizens are not happy with that possibility.

Nevada’s latest budget allocates $946 million over funding approved by the legislature in the last biennium. The new budget includes funding for information technology projects, such as an $11.5 million upgrade to the state’s criminal justice information system and $109 million for school security.

North Dakota’s state budget has increased significantly in tax revenue since the Great Recession.  In fact, the increase is 47 percent, which is the largest increase in the country.  Proposed funding includes approximately $280 million for city, county, township and airport infrastructure projects. The aviation funding, which is being called Operation Prairie Dog, will allow cities and counties to be eligible for state funds from oil impact dollars. The state’s airports have seen significant increases in traffic so there appears to be consensus that funding should flow quickly to aviation projects.

If Congress appropriates more funding for infrastructure spending at the regional levels of government, as most believe it will, the impact for economic stimulus will be even greater.  Private-sector investment in public projects is also gaining momentum because of new federal tax incentives.

Overall, it appears that the stage is set and there is hope that the country’s elected officials will address the nation’s infrastructure assets, its healthcare and education needs and technology upgrades that are long overdue.

Strategic Partnerships, Inc. is one of the leading procurement consulting companies in the U.S.  Contact them today to learn how to increase your public sector sales.

 

As President and CEO of Strategic Partnerships, Inc., Mary Scott Nabers has decades of experience working in the public-private sector. A well-recognized expert in the P3 and government contracting fields, she is often asked to share her industry insights with top publications and through professional speaking engagements.