Posts Tagged ‘Spending’

Heading Over the Funding Cliff?

April 21, 2010

It almost goes without saying that getting advance payments on stimulus dollars in order to balance current years’ budgets is a perilous path. This notion – which Rhode Island legislators are advocating – just allows states to delay, until the very last minute, balancing their budgets without this extra cash.

Many observers are deeply concerned about filling the void when the stimulus money dries up – whether it’s accelerated or not. Though the national economy is showing signs of improvement in some sectors, state budgets will hardly be able to fully recover by the time the stimulus money disappears.

Turns out, too,  that there’s an even more immediate risk. Rhode Island Education Commissioner Deborah A. Gist warned the state’s General Assembly yesterday that pulling forward more federal stimulus money from next year in order to balance the state budget this year could jeopardize the state’s ability to access those stimulus funds altogether.

She explains that, in order to receive stimulus funds, states have to prove they haven’t cut K-12 spending significantly or relative to all budget cuts. If Rhode Island pulls stimulus education funds forward and uses them for the non-education portion of the budget, it could run afoul of that federal requirement.

Rhode Island isn’t alone, we should note, in using or trying to use the bulk of its education stimulus dollars today and leaving less for the next fiscal year. As this story indicates, several states–including Alabama, Arizona, Georgia, Nevada, New Jersey and Washington–have already used all of their stimulus education funding, leaving zero of those dollars for the coming school year. We hope they aren’t setting themselves up to drop off the funding cliff.

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Cash for Clunkers: Digging Deeper

April 15, 2010

The debate over the economic benefits of last summer’s “Cash for Clunkers” program continues. Recently, the White House blog and Edmunds.com exchanged salvos in the argument.  But the economic benefits are only one part of the question. Examining performance metrics other than economic impact — such as the environmental benefits — sheds additional light on what exactly Cash for Clunkers accomplished.

Happily, fedgazette editor Ronald A. Wirtz  has a piece on the website of the Federal Reserve Bank of Minneapolis that digs  into data regarding some of the fuel efficiency savings that the country could gain from Cash for Clunkers.

Wirtz looked at the program in Minnesota, Montana, North Dakota, South Dakota, Wisconsin and the Upper Peninsula of Michigan. He found that gas efficiency gains were genuine, but the devil was in the details. Explained Wirtz:

“Average fuel efficiency between trade-ins and newly purchased vehicles rose about 50 percent, from roughly 15.5 miles per gallon to 24.

“But that covers up a lot of variation, part of which suggests a sop to owners of older, typically larger vehicles who used the opportunity to upgrade to something with only marginally better gas mileage.

“For example, about one quarter of the new vehicles purchased through the clunker program in the Upper Peninsula and the Dakotas had fuel efficiency gains of four miles per gallon or less. In many cases, older trucks and SUVs were simply traded in for newer but only marginally more fuel-efficient versions. Only 10 percent of all vehicles bought in the district under the program got 30 mpg or better.”  (see Chart 1).

The gains shouldn’t  be brushed aside, of course. As Wirtz is careful to note, even seemingly small fuel efficiency upgrades can save enormous amounts of fuel, which becomes more evident when using “Gallons per Thousand Miles” rather than “Miles per Gallon.”

A billion here, a billion there

March 12, 2010

You may have noticed that the figure used for total Recovery Act spending has metamorphosed from the $787 billion reported last year to $862 billion in reports this year.

Why the change?

The increased price tag comes from greater-than-anticipated spending in three areas of the stimulus  that are open-ended: Higher unemployment has led to an additional $21 billion spent on unemployment benefits; Food stamps are costing $34 billion more than estimated and the Build America Bond program cost estimates have increased by $26 billion.

This information comes from the Government Accountability Office’s “One Year Later” examination of the stimulus, released last week.