State News Roundup

News Roundup | June 28, 2012

Harrisburg, Pennsylvania may run out of cash in October with a $3.8 million dollar budget shortfall expected at the end of their fiscal year. The city has already missed one debt payment for the city’s incinerator. The city is currently trying to sell the incinerator and lease the city’s parking garages and water system to avoid a bankruptcy filing. City officials are currently barred from filing for bankruptcy. Legislators are currently pushing to extend the ban on municipal bankruptcy in the state through November. To find more on municipalities in the country who are struggling with bankruptcy, take a look at our blog, A Case Study of Municipal Bankruptcy.

In New York, the state legislature is refusing pleas from local governments to honor “home rule” requests, used to grant permissions on handling of local debt and passing of new taxes.  Cities had requested to spread debt payments and increase local sales taxes during the 2012 legislative session but were not granted the permissions needed. The Senate Republican majority spokesman Scott Reif stated, “Our position is we need to put our fiscal house in order by reducing spending, and not tax increases.” Local governments operating on flat state aid of $714.7 million must find ways to meet rising costs of pensions and wages and fund state mandate services without raising taxes. Mark LaVigne of the New York State Association of Counties commented. “the counties are under tremendous fiscal pressure. We are hopeful that the Legislature comes back to Albany this year and enacts a package of relief proposals.”

Louisiana state-run colleges will receive $66 million less from the state’s general fund. Higher education and health care are the only two areas not protected from cuts by the state constitution. Governor Bobby Jindal chose to trim government spending in an effort to avoid raising taxes. Tuition increases, increased class sizes and layoffs are some of the cost-cutting strategies schools are considering. University of New Orleans President Peter Fos plans to avoid massive across-the-board cuts saying, “We’re going to try to do it strategically.”

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