Friday, September 23, 2011

Windfalls all around

So here is something I should have noticed.  I actually will sometimes look at what the state's revenue reports look like.

The story today on the state of the city's budget has a real bonus in there.  The city received $10 million more than anticipated in aide from the state for municipal pensions.  The line in the Post-Gazette story is that "Officials weren't sure why the city and other municipalities were getting extra money this year".

There is no mystery here at all.  Pennsylvania distributes pension aide to local municipalities from a single dedicated source, the Foreign Fire Insurance Tax. So the more comes in from that tax, the more goes to the municipalities.  You might have thought the recession would put a damper on that type of tax, but I guess we are becoming a risk averse (i.e. insurance loving) society.. That or insurance premia are way up?  I'd like to know which it is actually. 

update. PG has more now on the 'windfall' across the state. The graph below is merely an artifact of a statutory change in timing of when the tax was due.  Need to think about the timing of this some.  Is is a one time boost or will next years $$ take a hit from the baseline.  Bottom line no matter is: don't plan on this next year.

From the June revenue report you get the fiscal year to date data for the 2010-2011 fiscal year in Harrisburg.  Below is the trend for the revenue stream dedicated to local municipal pension.  You will see a big big jump in the fiscal year that just ended.  There is a related story here.  It was not any goodwill toward Pittsburgh in particular that gave us a boost.   That boost in state aide went to most every municipality receiving pension aide from the state.  Should be a lot of happy local officials out there with some 'free' money hitting their books. 

Anyway... if we looked at that June report that came out last month, it should have been obvious a big(or at least bigger) check was coming our way.


Anonymous MH said...

Maybe all those commercials about insurance fraud being a horrible social disgrace for your children have paid off in a very strange way.

Friday, September 23, 2011 12:15:00 PM  
Blogger Conservative Mountaineer said...

Should be a lot of happy local officials out there with some 'free' money hitting their books.

Unfortunately, that is *exactly* how it will be viewed. I would bet local officials will fall over themselves in spending this 'free' money on something that requires future maintenance-type costs or other costs. (Think Clinton's 'Cops on the Streets', Homeland Security Grants buying equipment that will never be used, et al.)

$10M extra for the Grant Street crowd? Yowsa! That's some serious play money.

Friday, September 23, 2011 4:59:00 PM  
Blogger Conservative Mountaineer said...

And, before I'm slammed by those who say, "But, this is for Pensions!" remember this - Money is fungible.

If the City gets $10M in 'free' money, you can bet they will use that money for Pensions (over-bloated poorly run and Pensions should be cut just like us private-sector employees, but I digress) and then use the $10M they were going to use for Pensions and *blow-through* that $10M.

Bank on it. Politicians and bureaucrats, especially Liberal Democrats, just can't help themselves.

Friday, September 23, 2011 5:05:00 PM  
Anonymous MH said...

CM is an arsonist, er .... a job creator.

Friday, September 23, 2011 6:00:00 PM  
Anonymous Anonymous said...

Insurance is good business in a down economy. For a multitude of reasons, people buy more insurance when the economy is bad.

Saturday, September 24, 2011 7:22:00 PM  
Anonymous Anonymous said...

anyone notice how laughable the pension fix is now and how dumb council looks? the City now doesn't have actually fund the pension because the state just declared it to be "62% funded" due to future contributions. Now, less money will go into the pension and we will have a balanced budget. Kick the can, kick it real hard, down the road.

Saturday, September 24, 2011 7:23:00 PM  

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