Sunday, February 6, 2011

State and Local Governments Need Our Help

There's just no way state and local governments can get by on the meager taxes we offer them. Just look at the chart. The taxes are barely exceeding the rate of inflation (by a huge margin). This isn't even all of them. It's just a subset.

Zeb, come home: Dog crosses 520 bridge in rush hour

Good thing he didn't make his break this spring. He might have faced a hefty toll.

He avoided the upcoming $3.50 peak hour toll?

Will he also avoid the parking rate increases and proposed ferry rate increases? Will he continue to support the local economy's many restaurants or will he simply decide to stay home and eat out of a can?

Zeb must be stopped!

Source Data:
St. Louis Fed: Property Taxes
St. Louis Fed: Sales Tax
St. Louis Fed: Personal Income Tax
U.S. Census: Population
St. Louis Fed: Population


Jazzbumpa said...

I'm quite certain I'm missing your point. Looking from the 1981 trough to the 2005 peak the increase is something like 2300 to 4000 (eyeballing is hard) or 1.74x.

If you adjust for inflation using the CPI, from 1981 (avg for year = 90.93) and 2005 (195.27) the factor is 2.15x. For the GDP deflator it's 99.99/52.23 = 1.91.

That's a shortfall of 9%, using GDPDEF or 19% using CPI.

Data from FRED.

On the other side of the ledger, State and local spending has grown more slowly since ca. 1980 than it did before.


Jazzbumpa said...

I meant to provide this link for spending.

Time to hit the sack.


Stagflationary Mark said...


I'm quite certain I'm missing your point.

If you adjust for inflation using the CPI...

The chart is already adjusted for inflation.

Perhaps I should have been more clear. The entire chart is in December 2010 dollars.

It looks like a chart you should need to adjust for inflation, but it isn't. Those tax increases are in real inflation adjusted dollars!

Jazzbumpa said...

Missed that detail. Mea culpa.

Interesting that property taxes are pretty flat(-ish.) Where's the real estate bubble?

Biggest gain is in sales tax. Much of that could just be from growth in the economy. Ditto income taxes.

Another thing to consider is federal transfer payments. I don't have the data on that.


MaxedOutMama said...

Mark - it really is all about the state and local retirement payments.

On the other hand, it should give us all reason to comprehend why so many states are seeking either judicial relief from or waivers from the Medicaid mandate in health care reform.

They really CAN'T afford it.

Nor can they really afford to raise taxes too much more. All but a few states will have populations that are far more elderly with much lower incomes. Many mid-elderly will sell and leave. They stay as long as they are pinned to their jobs and then that's it.

Jazzbumpa said...

OK. Here is real GDP/Cap for the U.S.

1971 $21249
2005 $42664

Increase is 2.01x. Collections have fallen far behind GDP growth.

Link from the google search I did goes directly to a spreadsheet.

Included info:
Real Historical Gross Domestic Product (GDP) Per Capita and Growth Rates of GDP Per Capita
for Baseline Countries/Regions (in billions of 2005 dollars) 1969-20100
Updated: 12/22/10
Source: ERS International Macroeconomic Data Set

Contact: Dr. Mathew Shane (202-694-5282,

Mama Max -

I can't let you get away with blaming the unions. That is the kind of bull shit Mish spouts all the time. Govt employees are less compensated than their counterparts in the private sector. Pensions are underfunded because the states have not met their funding obligations. New Jersey is the poster child.

This is willful negligence on the part of state governments.


Stagflationary Mark said...


"Interesting that property taxes are pretty flat(-ish.) Where's the real estate bubble?"

My property taxes went up (slightly) even as my home's price fell dramatically . I have never seen a reduction in my property tax.

"Collections have fallen far behind GDP growth."

I would (and do) argue that much of that GDP growth was built upon an unsustainable ponzi scheme, an illusion of prosperity if you will.

Stagflationary Mark said...


"Many mid-elderly will sell and leave. They stay as long as they are pinned to their jobs and then that's it."

I hear that. Washington State is walking the tightrope with me. If property taxes someday push me out of my home, they will also probably push me out of the state. I'll have instant mobility and there would be 49 other states competing for me.

remy said...


I agree with your pension stance... The rich keep getting richer, and the poor poorer (Mark you showed graphical evidence of this). People like Mich support the elite by pitting the gov worker with a pension and union worker against the private sector worker. Private and Public employees need to unite to prevent the elite from siphoning more than they currently do...

Stagflationary Mark said...


Mish doesn't seem to care much about growing wealth and income inequality. I searched his blog for it. He quotes people that talk about it and in a few places he thinks it is a reason for concern, but he really doesn't offer any solutions for it that I can see.