2011 Best State Budgets


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The business world is a challenging arena where winners achieve great heights through hectic battles. There are tough decisions and sacrifices to be made to achieve state budgets through best practices. Last year had a list of winners in the race. Here are six winners for the 2011 state budget battle:

1. Governor Scott Walker (Wisconsin): He conquered challenges like protests, nine campaigns to recall the state senator, a Supreme Court election recount, and bitter legal confrontations. This is what it took him before he could sign the spending bill close to the state budget he had proposed. In his first term as a republican, Scott Walker got the $66 billion budget, and did not increase taxes for best practices. He managed to balance the budget by cutting a number of activities. He reduced the K-12 education by $800 million, cut down on university spending by $250 million, and minimized state spending on Medicaid by $500 million.

2. Governor Andrew Cuomo (New York): He closed a budget deficit of $10 billion without implementing new taxes for best practices. Gov. Andrew Cuomo achieved this through state legislature support. He cut back on budgets assigned to hospitals and schools in New York. He succeeded in closing the budget gap, and his popularity rose to 73%.

3. Governor Jerry Brown (California): California’s spending plan worth $85.9 billion relied on economic improvement. There was need for major cutbacks before Governor Jerry Brown achieved a second on-time balanced budget in 10 years. His plan included best practices like reducing school expenditure by $3 billion, University quota by $1.3 billion, and state park closure in 70 states. All this helped in achieving success with closing the state budget to $25 billion.

4. Governor Chris Christie (New Jersey): Governor Christie vetoed $1.3 billion or more in order to achieve a state budget of $29.7 billion. He slashed spending largely on school aid and state municipal facilities for best practices. With this he made a major triumph and reduced government spending, thereby improving the conditions of New Jersey. The government increased employee pension and limited bargaining rights for the public sector unions in New Jersey.

5. Governor John Kasich (Ohio): Governor Kasich succeeded in achieving his legislative agenda. He accomplished a lot with his two year spending bill, amounting to $55.8 billion. It included privatization of numerous state prisons, revamping Medicaid, banned abortions in hospitals, and tied teacher salaries to the achievements of students. This eliminates estate taxes and cut down entitlements of local governments to state aid as part of essential best practices.

6. Governor and Lawmaker Tom Corbett (Pennsylvania): He finalized and signed the state spending budget for Pennsylvania. This happened for the first time in a decade. The plan for $27.15 billion came as a victory for Pennsylvania. After an almost impossible battle with best practices, republicans succeeded and got a bill that cut spending by $1 billion. It was a major achievement because it came without increasing taxes.

Winning the best state budget was not easy, and this is why only few people succeeded.

2011 Worst State Budgets


American economy has gone through economic crisis that took a toll in some states. As crisis unfolded some states had to consider taking drastic measures in order to balance the state budget through best practices. The 2011 report issued by the National Conference of State Legislatures (NCSL) presented a clear picture of budget gaps. To succeed with closing the budget gaps most states were forced to spend less, increase taxes, seek help from the federal government and to sell bonds.

Those states that failed in best practices to close this gap came out as the worst state budgets. Five of the worst state budgets in 2011 include:

1. Governor Mark Dayton (Minnesota): His government failed to conclude the plans to tackle the $5 billion budget deficit. As a result, road constructions, state parks, rest shops on the highway, and zoo management had come to a halt. Moreover, social services and other state funded facilities like women’s shelters, and drug treatment centers are struggling to remain open. These failures in implementing best practices have delayed tax increases and cutbacks on spending. Rumors are that the legislature and Dayton are still $1.4 billion apart from one another on the agreement. There is still no visible closing to bridge the budget deficit.

2. Governor Dan Malloy (Connecticut): Governor Malloy along with the State Employee Unions could not come to a reasonable agreement. Public employee unions rejected the proposal implementing a wage freeze for two years. This proposal could have avoided employee layoffs, which could have served for best practices. At the end, both parties were disappointed. Malloy had announced his plan to lay off 5,500 workers and reduce state funding by 2% to ensure that municipalities succeed in closing a $1.6 billion gap. Instead, lawmakers didn’t only reject Malloy’s plan. They also forced the government to lay off 1000 more state employees.

3. Governor Nikki Haley (South Carolina): Only eight out of 35 Haley’s budget vetoes were left standing after South Carolina’s Republican-controlled legislature dominated them. This came as a huge blow to Haley’s attempts to close the budget deficit for best practices. At the end, only $508,000 out of Haley’s proposed $212 million spending cuts were approved. Lawmakers rejected her cuts to spend less on public schools, economic development, job training, and state Arts Commission and conservation programs.

4. Vendors (Illinois State): 2011 ended with $8.3 billion unpaid bills. Almost half of this money is owed to state vendors, such as healthcare providers and food distributers. Moreover, corporate tax refunding of $850 million, interfund borrowing of about $750 million and employee health insurance for $1.2 billion were also included in the Reuter report. If the bill had passed, Illinois would have used $6.2 billion bonds to pay off with best practices. Now the budget deficit will get worse than before.

5. Governor Rick Scott: (Florida): Even though Scott successfully cut state spending by $4 billion, his measures made him less popular among voters. This was because his $69.7 billion tax increased along with the state spending cuts for best practices. He also cut spending on K-12 education by $1.35 billion and on Medicaid by $1 billion. The consequence of this budget was that 4,500 positions in the state government were eliminated. More than 6 Florida voters, out of 10 disapprove Scott’s job performance and his use of best practices.

The consequence of failed best practices is that the budget deficit is still high in these states.

State Budgets and the Effects on Population


State budgets give way to a multitude of possibilities for the people living in them. If a budget is flexible, its inhabitants will enjoy a plenitude of facilities provided by the state. But if a budget is rigid and there’s no room for extra expenditure, then the inhabitants will have to live with forced conformity with little room for recreation and reconstruction of roads etc.

Ideal state budgets are aimed towards minimizing the deficits and increase in savings. This helps a lot when it comes to natural disasters or financial mishaps. The savings deposited by individuals can be used up to get things back on track like reconstruction of tornado hit houses or flooded industries or sloppy stock market etc.

For the fiscal year of 2010-2011, the capital gains had certainly fell off a cliff with a drop in personal income taxes and prolonged weak sales.

Personal Income

There are states which do not have taxes imposed on personal income. These are:

  • Wyoming
  • Florida
  • Texas
  • Alaska
  • Nevada
  • Washington
  • New Hampshire
  • Tennessee and
  • South Dakota

Although these states have a high rate of employers settling there, the services for common people are limited.

Sales tax

Following states have been said to have the highest sales tax numbers in the United States.

  • Rhode Island, Mississippi, Tennessee and New Jersey have had a sales tax of 7 percent
  • Washington, Minnesota and Nevada being second at 6.5 percent
  • And Texas, California and Illinois standing at 6.25 percent.

States like Alaska and Montana do not have sales tax imposed on them.

Good Budgeting

In 2011, Wisconsin had a budget of sixty six billion dollars without increasing taxes on best practices with the Governor of New York closing in on a budget of ten billion dollars. Both the states reduced k-12 education expenditure by 800 million dollars closing the budget gap to a noticeable limit.

The Important Points of a State Budget


Government budgeting is an area of finance that needs proper guidance. It is a very important part of financial planning.

Since budget is an ‘uncertain plan’, there is always the risk of things not going right. This is the government releases canons to be followed when preparing a budget, especially a state level budget.

Given below are five such cannons that every state budget should follow for it to be strong and serve the purpose correctly.

Flexible

A state budget should be flexible or elastic. If a budget is not flexible, it will be very difficult to fully implement it. Since a budget is based on expectations and the future, which is uncertain, a stringent/inflexible budget will create problems for the government or economy.

Since revenues and expenditure are uncertain, having an etched-on-stone budget will be problematic. It is also important because, at times, higher authorities demand certain changes in the budget, without which it cannot be fully legalized.

Transparent

All the information in the budget and the procedure that goes in creating that budget must be readily available to everyone who is going to be affected by the budget. This is why federal or government budgets are released to the public.

It is important for the public to have access to the information as a lot of their decisions are based on the state budget, which can directly influence individual and corporation’s decisions.

Surplus

State budgets should always be surplus budgets. The US Federal Budget is mostly in a deficit, mainly due the huge oil imports and aid given to third-world countries. However, state budgets should always be prepared keeping revenues in mind.

Deficit budget negatively impacts a state’s position. It is a very vital canon of budgeting, which if not followed may cause huge problems for everyone.

Law Obeying

A budget should be prepared keeping in mind all the laws and regulations. It is important that only those who have the authority to prepare the budget prepare it. Other important aspects should also be largely followed such as a minimum or maximum import/export quota set by the government.

A budget, if unlawful, may be discarded by the people or higher authorities. Generally, all the state budgets have to be passed by the President, after getting an approval from the legislature. A budget might not be accepted if it has any discrepancy.

Equal

A budget must be prepared keeping in mind all the important factors, such as the people or industries that will be affected by it. A biased budget will not be approved at any cost.

It must be prepared after taking inputs from all the relevant sections. Equality in every regard is very important. The best practice in this case is to have participation from all the sectors. This is why people often emphasize on including representatives from every sector (women, handicapped, industrial etc.) when a budget is being planned.

In this section we will discuss:

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