Tag Archives: infrastructure investment

Sold Out Futures by State in 2016: Debt and Infrastructure

Debt and infrastructure investment are supposed to go together.   State and local governments have operating budgets and capital budgets, and constitutions and charters that say that while money may be borrowed for capital improvements, the operating budget is supposed to be balanced.

During the Generation Greed era, however, that isn’t what has happened. For the U.S. as a whole, total state and local government debt increased from 14.1% of U.S. residents’ personal income in FY 1981 to 22.7% in FY 2010, even as infrastructure investment diminished. This was a matter of generational values, not just a matter of government.  One finds the same trend in business – more debt, less investment – during the same years, with the short term high of having more taken out relative to the amount put in contributing to perpetual political incumbency and sky-high executive pay.  A generation, it seems, has decided to cash in the United States of America and spend to proceeds before it passes away.

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Sold Out Futures: A State-By-State Comparison of State and Local Government Debts, Past Infrastructure Investment, and Unfunded Pension Liabilities

Four years ago I did an analysis of state and local government finance data from the U.S. Census Bureau, for all states and for New York City and the Rest of New York State separately, with data over 40 years, to determine the extent to which each state’s future had been sold out due to state and local government debts, inadequate past infrastructure investment, and underfunded and retroactively enriched public employee pensions.   Having a sold out future means having a future of higher state and local government taxes, diminished public services, and lower pay and benefits for newly hired public employees, and that is what many parts of the United States – most, in reality – are facing.

Over the past month I have re-created that analysis with data through FY 2016, the latest available, rather than just FY 2012, while adding some details.  This post and the next three will show what I found.

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“We Will Build the Information Superhighway”

That’s what lobbyists for the telecommunication companies promised in the mid-1990s, in the run up to the Telecommunications Act of 1996. What the industry’s lobbyists were trying to beat back was municipally owned telecommunications utilities, which are far more common in electric, gas, and even cable television than those living in urban New York might expect. State- and local government- owned electric and gas utilities employed 88,343 full time equivalent workers in the U.S. in FY 2014, according to U.S. Census Bureau data. Excluding water and sewer utilities, private utilities employed 500,000 people in 2014, according to the Bureau of Labor Statistics.

The telecom companies got their way. There would be no equivalent of the federal government’s rural electrification program for high speed internet. So 20 years latter did the industry keep its promises, or was the general public bamboozled by lobbyists and campaign cash?

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Sold Out Futures: A State By State Ranking Based on the Census of Governments

Note:  this analysis has been undated in a four post sequence starting here.

https://larrylittlefield.wordpress.com/2018/12/06/sold-out-futures-a-state-by-state-comparison-of-state-and-local-government-debts-past-infrastructure-investment-and-unfunded-pension-liabilities/

One can read the next post by following a link at the end of the one before.

For nearly 30 years Americans, individually and collectively, have sold the future to live for today. In the private sector each generation of Americans since those born in the mid-1950s has been paid less on average, and yet has spent more, failing to save for retirement and borrowing to make up the difference. Corporate executives had their firms borrow, not to invest in income producing assets, but to buy back stock, temporarily increasing stock prices so they could cash in on bonuses and options. Despite future financial strains on Social Security and Medicare from the retirement of the large Baby Boom generation, the federal government cut taxes drastically in the early 1980s and again in the early 2000s, while spending with abandon on health care for older seniors, ultimately leaving behind a pile of IOUs that someone else will have to pay somehow.

At the state and local government level infrastructure investment was cut but debts were increased, leaving behind roads, bridges, water, sewer, and transit systems and schools in need of repair with no money to pay for this. And pensions for older public employees who were cashing in and moving out were retroactively increased even as pension funding was cut, leaving a financial disaster behind. The state and local government aspect of this future selling, however, varies in severity from place to place. Using an analysis of Census of Governments data from the U.S. Census Bureau, this post will rank the extent to which each state’s future has been sold by its current and past politicians and the interest groups that supported them.

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