Upload
erepublic
View
226
Download
0
Embed Size (px)
Citation preview
The Changing Face of GovernmentDAN WHITE, SENIOR ECONOMIST
Governing Outlook Conference – February 2, 2016
22
00100
100
100
01101
101
101
02102
102
102
03103
103
103
04104
104
104
05105
105
105
06106
106
106
0707107
107
088108
108
099109
109
1010110
110
1111111
111
1212112
112
1313113
113
1414114
114
15151515
80100120140160180200220240260280
Mandatory state and local spending, including Medicaid
and pensions
All other spending
The Changing Face of Government
Sources: BEA, Moody’s Analytics
Nominal, 2000Q1=100
33
S&L GovtFederal Govt
InformationMiningOther
WholesaleFinance
ConstructionTransportationManufacturing
-500-400-300-200-100 0 100 200 300 400 500 600 700
No Certainty, No Hiring
Sources: BLS, Moody’s Analytics
Net change in employment since July-09, ths
44
General funds
Federal funds
Other state funds
Bond proceeds
40%
2%
31.3%
26.7%
Why Federal Certainty Is So Important
Sources: NASBO, Moody’s Analytics
Estimated FY15 state spending by source, % of total
55
13 13 13 13 14 14 14 14 15 15 15 150
2
4
6
8
10
12Social benefit payments to persons (i.e. Med-icaid)
Total spending
All other spending
Spending More…On Medicaid
Sources: BEA, Moody’s Analytics
State and local government nominal spending, % change year ago
66
13 14E 15F 16F 17F 18F 19F 20F2
3
4
5
6
7
8
State Medicaid spending, CMS forecast
Structural State Medicaid Imbalance Will Persist
Sources: CMS, Census Bureau, Moody’s Analytics
% change yr ago
State tax revenue, average rate of growth last 30 years
77
Pensions Becoming Big Ticket Item for ManyADC* as a % of state governmental revenue
Sources: Moody’s Investor Services, Moody’s Analytics
1.5% to <3%< 1.5%
3% to 4.5%> 4.5%
Average FY12-FY14
*Actuarially determined contribution
88
Unpaid Bills Just Make Things WorseActual contribution as a % of ADC*
Sources: Moody’s Investor Services, Moody’s Analytics
60% to <80%< 60%
80% to 100%> 100%
Average FY12-FY14
*Actuarially determined contribution
99
05
0.209722222
0.210416667
0.211111111
06
0.251388889
0.252083333
0.252777778
07
0.293055556
0.29375
0.294444444
08
0.334722222
0.335416667
0.336111111
09
0.376388889
0.377083333
0.377777778
10
0.418055556
0.41875
0.419444444
11
0.459722222
0.460416667
0.461111111
12
0.501388889
0.502083333
0.502777778
13
0.543055556
0.54375
0.544444444
-10
-5
0
5
10
15
20
25
30Government social benefit payments
Recessions Affect Revenues AND Spending
Sources: BEA, Moody’s Analytics
% change year ago
1010
More States Squirreled Money Away for FY16Rainy day fund balances % of GF spending, ppt change from FY15
Sources: NASBO, Moody’s Analytics
> 1 ppt> -1 to < 1 ≤ -1N/A
1111
4748495051525354555657585960616263646566676869707172737475767778798081828384858687888990919293949596979899000102030405060708091011121314151.01.52.02.53.03.54.04.55.05.5
Shrinking Capital Spending a Growing Problem…
Sources: BEA, Moody’s Analytics
Real government infrastructure spending, non-defense, % of GDP
1212
77
78
79
80
81
82
83
84
85
86
87
88
89
90
91
92
93
94
95
96
97
98
99
00
01
02
03
04
05
06
07
08
09
10
11
12
13
14
0
200
400
600
800
1,000
1,200States and local governments
Federal government
…And Federal Funding Lagging the Most
Sources: Congressional Budget Office, Moody’s Analytics
Spending on transportation and water infrastructure, 1977 = 100
1313
90
91
92
93
94
95
96
97
98
99
00
01
02
03
04
05
06
07
08
09
10
11
12
13
14
15E
16F
17F
18F
19F
20F
21F
22F
23F
24F
25F
20
30
40
50
60
70
80
Mandatory spending
Discretionary spendingTotal state and local government spending in 2015 = $2.49 trillion
Innovate To Do More With Less
Sources: BEA, Moody’s Analytics
State and local government spending as a % of total
www.economy.com
United States121 North Walnut StreetSuite 500West Chester PA 19380+1.610.235.5299
AustraliaLevel 101 O'Connell StreetSydney, NSW, 2000Australia+61.2.9270.8111
United KingdomOne Canada Square Canary Wharf London E14 5FA+44.20.7772.5454
PragueWashingtonova 17110 00 Prague 1Czech Republic+420.22.422.2929
1515
© 2016, Moody’s Corporation, Moody’s Investors Service, Inc., Moody’s Analytics, Inc. and/or their licensors and affiliates(collectively, “MOODY’S”). All rights reserved. ALL INFORMATION CONTAINED HEREIN IS PROTECTED BY COPYRIGHT LAW AND NONE OF SUCH INFORMATION MAY BE COPIED OR OTHERWISE REPRODUCED, REPACKAGED, FURTHER TRANSMITTED, TRANSFERRED, DISSEMINATED, REDISTRIBUTED OR RESOLD, OR STORED FOR SUBSEQUENT USE FOR ANY SUCH PURPOSE, IN WHOLE OR IN PART, IN ANY FORM OR MANNER OR BY ANY MEANS WHATSOEVER, BY ANY PERSON WITHOUT MOODY’S PRIOR WRITTEN CONSENT. All information contained herein is obtained by MOODY’S from sources believed by it to be accurate and reliable. Because of the possibility of human or mechanical error as well as other factors, however, all information contained herein is provided “AS IS” without warranty of any kind. Under no circumstances shall MOODY’S have any liability to any person or entity for (a) any loss or damage in whole or in part caused by, resulting from, or relating to, any error (negligent or otherwise) or other circumstance or contingency within or outside the control of MOODY’S or any of its directors, officers, employees or agents in connection with the procurement, collection, compilation, analysis, interpretation, communication, publication or delivery of any such information, or (b) any direct, indirect, special, consequential, compensatory or incidental damages whatsoever (including without limitation, lost profits), even if MOODY’S is advised in advance of the possibility of such damages, resulting from the use of or inability to use, any such information. The ratings, financial reporting analysis, projections, and other observations, if any, constituting part of the information contained herein are, and must be construed solely as, statements of opinion and not statements of fact or recommendations to purchase, sell or hold any securities. NO WARRANTY, EXPRESS OR IMPLIED, AS TO THE ACCURACY, TIMELINESS, COMPLETENESS, MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE OF ANY SUCH RATING OR OTHER OPINION OR INFORMATION IS GIVEN OR MADE BY MOODY’S IN ANY FORM OR MANNER WHATSOEVER. Each rating or other opinion must be weighed solely as one factor in any investment decision made by or on behalf of any user of the information contained herein, and each such user must accordingly make its own study and evaluation of each security and of each issuer and guarantor of, and each provider of credit support for, each security that it may consider purchasing, holding, or selling.