More bad budget news
Louisiana’s bleak financial picture got a little worse Monday, when the Revenue Estimating Conference downgraded the current-year revenue forecast by $103 million, and another $204 million for the 2015-16 fiscal year. The Associated Press has the story:
It’s the second midyear deficit since November. But while the first $170 million gap was largely closed with patchwork financing, [Commissioner of Administration Kristy] Nichols said this second deficit will involve mainly cuts. State agencies will be forced to slash spending with only a few months to eliminate the money, worsening the impact of the reductions.
As always, the largest areas of discretionary spending – and therefore, the most vulnerable to cuts – are health care services and public colleges. Nichols said the Jindal administration is “still striving” to shield higher education from midyear cuts.
Each $1 drop in the price of a barrel of oil translates roughly into a $11 million drop in severance taxes. Yesterday’s bad news brings the shortfall for next year to a whopping $1.6 billion. But while dropping oil prices have exacerbated the problem, it is worth noting that Louisiana was facing a shortfall regardless due to the Jindal administration’s persistent use of “one-time money” and sluggish income and sales tax growth.
The middle-class is shrinking
SInce 2000, the share of Americans who are middle-class has been shrinking, and not for the right reason. The New York Times reports:
In the late 1960s, more than half of the households in the United States were squarely in the middle, earning, in today’s dollars, $35,000 to $100,000 a year. Few people noticed or cared as the size of that group began to fall, because the shift was primarily caused by more Americans climbing the economic ladder into upper-income brackets. But since 2000, the middle-class share of households has continued to narrow, the main reason being that more people have fallen to the bottom.
The biggest driver of middle-class decline has been the loss of good paying jobs, especially for workers without a college degree. Today, only about 43 percent of Americans fall into the middle-class income bracket.
Inequality in the mortgage market
Millions of Americans ended up “underwater” on the mortgages–with a mortgage worth more than their house–when the housing market collapsed during the Great Recession. But the share of underwater homeowners is shrinking, reports the Washington Post. The catch? While white homeowners are coming up for air, black homeowners aren’t. The disparity is just another chapter in an ongoing story of the large wealth gap between black and white families.
The recession and tepid recovery have erased two decades of African American wealth gains. Nationally, the net worth of the typical African American family declined by one-third between 2010 and 2013, according to a Washington Post analysis of the Federal Reserve’s Survey of Consumer Finances, a drop far greater than that of whites or Hispanics. The top half of African American families — the core of the middle class — is left with less than half of the typical wealth they possessed in 2007. The wealth of similarly situated whites declined by just 14 percent. Overall, the survey found, the typical African American family was left with about eight cents for every dollar of wealth held by whites.
Researchers say one of the major contributors to the wealth gap is the long-term effects of “redlining” and other discriminatory housing policies that prevented black families from building home equity. For many families–black and white–a house is the largest asset.
Ohio’s governor advocates for Medicaid expansion
Gov. John Kasich has been one of the strongest proponents of Medicaid expansion. As The Advocate notes in its lead editorial, the Republican governor of Ohio says Medicaid expansion is the fiscally responsible, moral, and conservative thing to do.
“I gotta tell you, turning down your money… on an ideological basis, when people can lose their lives because they get no help, doesn’t make a lot of sense to me,” Kasich said.“I’m a believer that it is in the conservative tradition to make sure we help people get on their feet so they then are not dependent…People are healthier, they’re getting their lives back, they’re getting work, and that’s the reason I’m doing it.”
Kasich also referred governors and legislators who oppose Medicaid expansion to Matthew 25, which extols Christians to help the poor. Here in Louisiana, Gov. Jindal continues to stand in the way of Medicaid expansion, denying a quarter of a million Louisianans basic health coverage.
Number of the Day
$1.6 billion – Shortfall facing the state budget next year, which grew by $200 million yesterday when the revenue estimate was downgraded again (Source: Associated Press)