Subject: Studies in the News 03-69 (October 21, 2003)


CALIFORNIA RESEARCH BUREAU
CALIFORNIA STATE LIBRARY
Studies in the News:
Revenue, Taxation and Budgeting Supplement


Contents This Week

Introductory Material GENERAL GOVERNMENT
   Unused state allotments
   Federal appropriations update
   Proposition 13 and state budget limitations
   Factors causing budget deficit
   State tax revenue update
   2003-04 state budget and beyond
   The current state fiscal crisis
   Budgetary assumptions of the states
   State spending in the 1990s
   Retroactive state tax legislation
   Raising the gasoline tax
PREVIOUSLY IN STUDIES IN THE NEWS
   Studies in the News, October 1, 2003
   Studies in the News, October 17, 2003
Introduction to Studies in the News

Studies in the News is a very current compilation of items significant to the Legislature and Governor's Office. It is created weekly by the State Library's Research Bureau to supplement the public policy debate in California’s Capitol. To help share the latest information with state policymakers, these reading lists are now being made accessible through the State Library’s website. This week's list of current articles in various public policy areas is presented below.

Service to State Employees:

  • When available, the URL for the full text of each item is provided.

  • Items in the State Library collection can be checked out to state officials and staff.

  • Access to all materials listed will be provided by the State Information Reference Center, either by e-mail to cslsirc@library.ca.gov or by calling 654-0261.

The following studies are currently on hand:

GENERAL GOVERNMENT

FEDERAL AID

Extended Availability of SCHIP Funds. By Federal Funds Information for States. FFIS Issue Brief 03-45. (FFIS, Washington, DC) September 30, 2003 3 p.

["Public Law 108-74 extended the availability of the FYs 1998-1999 funds through FY 2004 and established a statutory procedure for redistribution and retention of FYs 2000-2001 funds while extending their availability. The law also expanded the permitted uses of SCHIP funds for states whose high pre-SCHIP Medicaid eligibility for children had precluded their using SCHIP money to cover them."]

[Request #S9348]

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FEDERAL BUDGET

Appropriations Update: Three Down, Ten to Go. By Federal Funds Information for States. FFIS Budget Brief, 03-08. (FFIS, Washington, DC) September 25, 2003

["Much work remains to be done on the FY 2004 appropriations process.... The continuing resolution likely will extend FY 2003 funding levels.... Generally speaking, most discretionary state grant programs are level-funded or receive slight increases.... This Budget Brief highlights the status of the budget process and the potential impact on states."]

[Request #S9349]

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PROPOSITION 13

Proposition 13 and State Budget Limitations: Past Successes and Future Options. By Michael J. New, Cato Institute Briefing Papers. No. 83. (Cato Institute, Washington, DC) June 19, 2003. 12 p.

Full Text at: www.cato.org/pubs/briefs/bp83.pdf

["This study ... examines California’s tax and spending trends during the past 25 years. The study then focuses on lessons learned from Proposition 13.... A statistical analysis concludes that well-designed tax and expenditure limitations can restrain government growth. Finally, the successful budget limitations in place in Colorado and Washington State are discussed."]

[Request #S9350]

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STATE BUDGET

"The California Budget Crisis: Factors Leading to the Current Budget Deficit and a Discussion of Certain Proposed Solutions." By Phil Spilberg and Lori Alexander, California Franchise Tax Board. IN: National Tax Journal, vol. 56, no. 4. (September 2003) pp. 555-566.

["We describe California's current budget deficit, the Governor's proposed solution, the underlying causes of the deficit, and actions the federal government might consider to aid the state in this time of history-making deficits."]

[Request #S9351]

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Economic Update and Monthly Cash Report. By the California Department of Finance. Finance Bulletin. (The Department, Sacramento, California) September and October 2003. 4 p.

Full Text at: www.dof.ca.gov/HTML/FINBULL/Sept03.doc

["The state has released information for July and August which shows total revenue came in $105 million above forecast. In September, personal income tax payments were a robust $270 million more than projected, making for a combined $472 million beyond official projections in that single category for the full quarter."]

[Request #S9352]

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The 2003-04 Budget and Beyond. By the California Budget Project. Budget Watch. Vol. 9, No. 3 (The Project, Sacramento, California) September 2003. 8 p.

Full Text at: www.cbp.org/2003/0309bwvol93.pdf

["The record $38.2 billion budget gap was filled by a combination of loans and other borrowing, spending reductions, taxes and fees, other revenues, and one-time measures.... As enacted, the budget provides a reserve of $1.4 billion. This report focuses on the 'big picture' impact of the budget agreement."]

[Request #S9353]

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STATE BUDGETS

The Current State Fiscal Crisis and Its Aftermath. By Donald Boyd, The Nelson A. Rockefeller Institute of Government. Prepared for the Kaiser Commission on Medicaid and the Uninsured (The Commission, Washington, DC) September 2003. 53 p.

Full Text at: www.kff.org/content/2003/4138/4138.pdf

["This paper describes the root causes of the state fiscal crisis, examines trends in state revenues and spending, and offers a prognosis that states are likely to face continued fiscal stress for the next several years."]

[Request #S9354]

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State Budgetary Assumptions in 2003 -- States Cautiously Projecting Recovery. By Nicholas W. Jenny and Cecilia Ferradino, Fiscal Studies Program, The Nelson A. Rockefeller Institute of Government. State Fiscal Brief. No. 68. (The Institute, New York, New York) July 2003. 15 p.

["The median state forecast for 2003 real gross domestic product growth is 2.7 percent, followed by 4.1 percent growth in 2004. Slow upward movement in other key economic variables such as retail sales, employment, wage and salaries, personal income and corporate profits, is expected throughout this year and into the next.... Full economic recovery is expected in 2004, rather than 2003.... Sizeable deficits for the current and upcoming fiscal year plague almost every state in the union."]

[Request #S9355]

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"State Spending in the 1990s." By Ronald K. Snell and others, National Conference of State Legislatures. IN: State Tax Notes, vol. 29, no.13 (September 29, 2003) pp. 913 - 920.

["This report reviews the growth of state spending in the 1990s, puts it into the context of the remarkable national economic growth of that decade, and discusses some of the major changes that occurred in state spending."]

[Request #S9356]

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STATE TAXES

"Examining the Boundaries of Retroactive State Tax Legislation." By Ann Holley and Sharlene Amitav, KPMG LLP, Washington National Tax Practice. IN: State Tax Notes, vol. 29, no. 13 (September 29, 2003) pp. 907 - 912.

["The article first explores limitations on the states’ ability to enact and enforce retroactive legislation. The article then examines the meaning of 'retroactivity,' particularly in the context of the constitutionally significant distinction between retroactive legislation and legislative clarification."]

[Request #S9357]

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TAXES

"A Dozen Reasons for Raising the Gasoline Taxes." By Martin Wachs, Institute of Transportation Studies, University of California, Berkeley. IN: State Tax Notes, vol. 29, no. 12 (September 22, 2003) pp. 849 - 852.

["Elected officials have been reluctant to raise fuel taxes despite increases in the cost of transportation programs. Other forms of support, especially borrowing and local sales taxes, are playing larger roles in transportation finance. Raising fuel taxes would be more effective, efficient and equitable than the alternatives that are increasingly more popular."]

[Request #S9358]

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PREVIOUSLY IN STUDIES IN THE NEWS
[This section links to items in Studies in the News since the last Revenue, Taxation and Budgeting Supplement.]

"General Government." IN: Studies in the News, 03-63 (October 1, 2003)

[Includes: "Roots of fiscal stress for states."]

[Request #S9359]

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"General Government." IN: Studies in the News, 03-68 (October 17, 2003)

[Includes: "Federal budget deficit projections;" and "Future budget deficits."]

[Request #S9360]

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