State Net Capitol Journal – July 22, 2013

State Net Capitol Journal – July 22, 2013

Budget & Taxes

STATES MAKING UNPRECEDENTED UNEMPLOYMENT INSURANCE CUTS: The dramatic cuts North Carolina made to its unemployment insurance program this month drew fierce protests in Raleigh and national headlines. But they were just the latest in a string of unprecedented reductions states have made in unemployment aid even as unemployment rates remain high in much of the nation.

Since 26 weeks became the standard length of unemployment benefit coverage decades ago, no state had offered less than that — at least until recently. Now Georgia's benefits last only 18 weeks, and North Carolina and four other states have limited their coverage to 19 or 20 weeks.

With 4.3 million of the 11.8 million unemployed Americans having been without work for 27 weeks or longer, according to the most recent data from the U.S. Department of Labor, the trend of states scaling back their unemployment benefits worries some safety-net advocates.

"These are historic and disturbing cuts," said Mike Leachman Director of State Fiscal Research with the State Fiscal Policy division of the Center on Budget and Policy Priorities. "When the next recession hits, the unemployment system of the country is going to be significantly less effective. And it means the next recession will be deeper than it otherwise would have been."

North Carolina Gov. Pat McCrory (R) says states are only trying to pay back money borrowed from the federal government to cover the cost of extended unemployment benefits offered to long-term unemployed workers during the Great Recession. Overall, states collectively owe the federal government approximately $21 billion for loans they took out to keep their unemployment compensation funds afloat during the downturn. California leads that group, owing almost $9 billion. (STATELINE.ORG, USA TODAY, CAPITAL PUBLIC RADIO [SACRAMENTO])

HURRICANE SANDY-STRICKEN SHORE TOWNS AVOID BIG TAX HIKES — FOR NOW: One of the many fears created by last year's Superstorm Sandy was that it would cause so much property damage in coastal towns of New Jersey, New York and Connecticut that they would have to impose huge tax increases on surviving structures to make up the difference. But thanks largely to the more than $60 billion in Sandy relief approved by Congress those tax hikes haven't been necessary.

"We were all concerned there would be a big tax increase," said Ray Ryan, a resident of Mantoloking, New Jersey, where virtually every home was destroyed or damaged. "But we are delighted it didn't. It makes absolutely wonderful sense when you consider the storm aid that was available."

The affluent borough actually adopted a 14.6 percent increase in its municipal tax rate. But because of the influx of storm recovery money and the lowering of property values due to the storm, most tax bills will end up being lower this year.

"That's the good news: Taxes in 2013 will be lower," said Councilman Steve Gillingham.

Things could be different next year, however, when the tide of storm aid recedes. As Gillingham noted, "because these are nonrecurring revenues, it may be hard in subsequent years to provide the same level of services." (ASSOCIATED PRESS, PHILADELPHIA INQUIRER)

CO MISMANAGING REGULATION OF MEDICAL MARIJUANA: For the second time in recent months state auditors in Colorado have found fault with a government agency charged with overseeing the state's medical marijuana industry. In March, auditors uncovered evidence of wasteful spending and incomplete enforcement at the Department of Revenue's Marijuana Enforcement Division. The audit released last week found that the Colorado Department of Public Health and Environment has, among other things, been lax in its regulation of physicians who prescribe medical marijuana.

One doctor, for instance, approved medical marijuana for over 8,400 patients. Another recommended 501 marijuana plants for a single patient, far above the standard of six plants per patient.

The critical reports come as the state prepares for the arrival of recreational pot businesses early next year, as a result of voter approval of Amendment 64 last November. (DENVER POST)

BUDGETS IN BRIEF: From mid-2011 through the end of 2012, ARIZONA spent only 6 percent of the $268 million it was allocated to help homeowners avoid foreclosure, despite having the nation's second highest foreclosure rate during much of the mortgage crisis. The state spent more than any other, however, in setting up its mortgage assistance program (AZCENTRAL.COM). • LOUISIANA's Legislative Auditor issued a report last week accusing the state tax commission of failing to provide sufficient oversight of residential property tax assessments. The commission categorically disagrees with the auditor's findings (TIMES-PICAYUNE [NEW ORLEANS]).

- Compiled by KOREY CLARK

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