Hoover Institution fellows have recently generated a wide range of useful research and insightful commentary on state and local policy in America. Hoover researchers have now developed a tool to track the financial health of state and local governments. Fellows have also expressed their views on the future of California as it faces fiscal challenges, possible new rules restricting how it deals with homeless encampments, and high stakes battles over tax increases.


State and Local Leadership Forum

Senior State Officials Gather at Hoover for State and Local Leadership Forum
The Hoover Institution welcomed more than a dozen chiefs of staff and senior advisors to US governors on May 20–21 for the annual State and Local Leadership Forum. Hoover Institution director Condoleezza Rice welcomed the group and spoke with them about what she believes are the most pressing challenges America faces today.
Presentations included Volker Distinguished Visiting Fellow Ben Ginsberg speaking about safeguarding the US election system, which has faced challenges around misinformation and voter trust since the 2020 presidential contest. Attendees also heard from visiting fellow Sarah Anzia, who studies the stability and longevity of US public-sector pensions, and Botha-Chan Senior Fellow Philip Zelikow, who spoke of the risks the United States faces in the near term from an anti-US axis consisting of Russia, China, North Korea, and Iran.
Attendees spoke about challenges facing their respective states, including increased political polarization; a congressional deadlock limiting the federal government’s ability to provide states with funding; and the impact of disinformation and misinformation on their residents.
You can read more about the forum here.

California State Taxes

Policy Lab Summit Helps Local Leaders Confront Wide Range of Challenges
The Hoover Institution and Stanford’s Graduate School of Business (GSB) gathered mayors and other local officials together on March 6–7 for a Policy Lab Summit. The Policy Lab is a collaboration spearheaded by the State and Local Governance Initiative, led by senior fellow Joshua D. Rauh, whereby student researchers from GSB work with Rauh and Hoover colleagues to provide research-based policy solutions to challenges facing mayors and local officials. The summit aimed to connect Hoover and GSB researchers with state and local officials open to research partnerships. Attendees heard about recent projects looking into the state of housing, pension stability, economic development, and tax competitiveness among state and local jurisdictions. Participants also heard presentations from leading Hoover scholars including Steven J. Davis, Thomas W. and Susan B. Ford Senior Fellow, and Herbert Lin, Hank J. Holland Fellow in Cyber Policy and Security.
A group of Bay Area mayors also joined the discussion, talking about their respective relationships with the state government and sharing concerns about housing affordability, transportation, and planning and commercial zoning challenges facing the region.
You can read more about the Summit here.



Crucial, Not Cruel and Unusual: The Supreme Court Weighs Homelessness Regulations

Joshua D. Rauh and Jillian Ludwig, research program manager for Hoover’s State and Local Governance Initiative, wrote about a case before the Supreme Court that will have significant implications for how California cities will deal with homeless encampments.
As it stands, California cities cannot enforce encampment bans due to federal court rulings that cite a 2018 case that found removing encampments violates the Eighth  Amendment’s ban on cruel and unusual punishment. Law enforcement leaders contend that homeless encampments pose a significant fire risk, with San Francisco fire crews responding to nearly 700 encampment fire calls in the first 10 months of 2023.
Click here to read more.

United States

How Healthy Are State and Local Finances?
In Defining Ideas, research fellow Oliver Giesecke writes about how he pieced together data to analyze the fiscal health of US states and municipalities. He and his associate Seamus Duffy, research analyst for the State and Local Governance Initiative, developed the Municipal Finance dashboard, offering credit spread and fiscal fundamentals data on states and major US cities.
The dashboard, which has received national media coverage in the Bond Buyer, draws on data from the municipal bond market, which is worth about $4 trillion. The dashboard is updated daily and provides scores on indicators including leverage, liquidity, and reserve ratios.
Click here to read more.

California Flag

How One Obvious Mistake Created California’s Budget Crisis
In his latest column for California on Your Mind, senior fellow Lee Ohanian writes about how the state of California’s rosy revenue projections in 2022 doomed it to drown in red ink later. Since then, the state has gone from a $98 billion surplus to a $73 billion deficit—a swing of $171 billion, roughly equivalent to the annual GDP of Hungary.
Ohanian points out that state budget staff expected the capital gains explosion of 2022 to continue basically indefinitely and perhaps even increase, not accounting for the simple fact that equity markets fluctuate.
To get to balance, Gov. Gavin Newsom is proposing cuts to broadband access in poor communities, deferring capital maintenance, and cutting support for foster children. A state legislative proposal to create a single-payer healthcare system in California was defeated after it was estimated to cost $500 billion per year.
Click here to read more.

Baseball on a baseball field

California Tax Wars: Ohtani Beanball, Ballot Hardball

Bill Whalen, the Virginia Hobbs Carpenter Distinguished Policy Fellow in Journalism, writes about a California state senator’s effort to close a loophole that prevents states from taxing deferred compensation for out-of-state residents if payments are made in equal period amounts for a decade or more. The loophole was intended to protect the income of residents living off their pensions.
“Not coincidentally,” Whalen explains, “[Shohei] Ohtani signed a 10-year, $700 million deal with the Dodgers last December that pays him $20 million over the next decade, with the remaining $680 million payable from 2034 to 2043—by which time Ohtani will be pushing 50 years of age, presumably no longer playing baseball, and maybe residing in his native Japan instead of the Golden State.”
Whalen points out that the new year began with a bout of tax hardball in California, an attempt at imposing a global tax on residents’ property and wealth; it promises to continue this fall with a high-stakes statewide initiative on the November ballot that, if passed, would require a two-thirds majority of voters to approve local tax increases.
Click here to read more.
Ohanian and Whalen also spoke about recent challenges facing the Golden State in their latest California update of Hoover’s Matters of Policy & Politics podcast.

Fellow Spotlight: Oliver Giesecke

Oliver Giesecke

Oliver Giesecke is a research fellow at the Hoover Institution. Giesecke works on topics related to asset pricing and public finance. His recent work examines the finances of state and local governments across the United States, including the capital structure of state governments, the book and market equity position of city governments, and the status quo and trend of public-pension obligations. For his work on city governments’ finances, he was awarded the NASDAQ OMX Award for the best paper on asset pricing. In addition, Giesecke has conducted a large-scale survey that elicits the retirement plan preferences of public-sector employees across the United States.

For more insight on important state and local issues visit, https://www.hoover.org/focus-areas/empowering-state-and-local-governance

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