Business

US States Budgets Get Cash Relief

Published

15 years ago

October 19, 2009

Struggling states and towns got a dose of badly needed money this summer from a Cash for Clunkers program that poured hundreds of millions of dollars of tax revenue into their budgets.
Now, like the auto industry, recession-ravaged government are seeing revenue fall off as car buyers take a breather from the frenzied sales of July and August. That means less money for schools, roads, public safety and other projects that get much of their funding from states tax collections.
And while officials welcomed the shot in the arm, the extra clunkers money won’t come close to filling the gaping holes in their budgets or do much to solve the worst revenue downturn in decades.
“It is chump change,” said David Zin, an economist with the Michigan state senate’s fiscal agency.
State and city officials say their budget problems are too severe for one government programme to fix.
“Fifty-thousand is not to be sneezed at,” Dean Rich, finance director of O’Fallon, III, said of the city expected tax gain from its 16 car dealerships. But it’s not enough to prevent a job freeze and cuts to capital project for the town of 29,000 people.
“It’s not the windfall that is going to fix the $1 million shortage we have this year” he said.
Like most governments, O’Fallon suffered during the recession as people facing job losses, reduced pay, lost homes and general unease over the ecoomy snapped their wallets shut. That means big drops in sales tax, which makes up around half of many state budgets. Sales of cars and trucks, big-ticket items with high price tags, are a big component of sales tax collections.
Cash for Clunkers held some promise-customers bought nearly 700,000 new vehicles during late July and August, taking advantage of rebates of up to $4,500 on new cars in return for trading in their older vehicles. The programme ended up tripling the size of tis orginal $1 billion price tag due to its broad popularity. For government budget offices, that represented some rare good news.
The auto forecaster Edmunds.com estimated that the average clunker sales price was $26,321, meaning roughly $18 billion worth of new vehicles were sold under the programme. Multiplied by the average combined state and local sales tax of 7.5 per cent, the total tax bill amounts to a loose estimate of $1.36 billion.
But here’s some perspective – the budget shortfall of Michigan alone, the symbolic heartland of the U.S. auto industry, amounts to $2.8 billion. And it pales in comparison to the $240 billion that states collected in total general sales taxes in 2008.
“That’s more than a drop in the bucket…but not much more for state budgets,” said Robert Ward, director of fiscal studies for the Rockefeller Institute of Government in New York.
The taxes brought in by clunkers offered a summer shot of adrenaline for most states. The funds – often earmarked for school aid, highway repairs and law enforcement – came at a time when they were struggling with big shortfalls.
Kentucky reported that clunkers taxes propped up its Road Fund, which supports the state’s network of roadways. Motor vehicle usage taxes grew 11.4 per cent to $36 million in August, helping keep the fund flat for the month. The state estimates it can now afford to see receipts fall more than 4 per cent for the rest of fiscal year and still meet its budget forecasts.
Legislative estimates in Michigan show the state may have taken in $39 million from Cash for Clunkers. About a third of that money is devoted to education.
Massachusetts reported that motor vehicle sales tax revenue rose nearly 36 per cent in August from a year earlier, higher than the state’s monthly target. That gain, combined with a rise in the overall sales tax that month, pushed vehicle tax collections above the monthly goal.
The extra money may be a help, but state budget officials say it’s minor compared with their huge problems.
Kentucky officials have warned that until unemployment improves – about 11 per cent of states residents are now jobless – tax revenues will remain in the doldrums.
In Michigan, where the states sales tax is the major source of aid for schools, lawmakrers proposed cutting $218 per pupil from the aid the state government gives to local school districts. That’s despite the clunkers money and extra vehicle sales tax revnue from laid off auto workers who got vouchers for new cars as part of their severance. Sales tax collections are still down 9 per cent.
Auto sales nationally fell 41 per cent from August to September, a drop caused largely by people who would have normally waited a few months to buy a new vehicle rushing in to take advantage of the federal programme’s big rebates.
That hangover showed up in Massachusetts sales tax collections last month, which were 5 per cent below forecasts. That worries Robert Bliss, a spokesman for the state revenue department.
“Has the pool been drained as a result of this programme for the next couple of months? That is the question,” he said.

Business

NIGCOMSAT Seeks Policy To Harness AI Potentials

Published

2 days ago

December 20, 2024

The Tide

The Nigerian Communications Satellite Limited (NIGCOMSAT), the country’s satellite operator, has called for immediate promolgation of policy action that will enable the country to harness the potentials of Artificial Intelligence (AI).
NIGCOMSAT, also warned that Nigeria risks missing out on Africa’s projected $1.2trillion share of the global AI economy by 2030.
Managing Director of NIGCOMSAT, Nkechi Egerton-Idehen, disclosed this in a statement issued at the weekend following her participation in the Meeting of the National Council for Communications, Innovation, and Digital Economy.
“Artificial intelligence is reshaping industries, economies, and societies worldwide, with projections that it will contribute up to $15.7trillion to the global economy by 2030. Africa stands to gain $1.2trillion of this if the right policies and innovations are in place”, Idehen said, citing a PricewaterhouseCoopers report.
The NIGCOMSAT MD underscored the transformative potential of AI in agriculture, highlighting its applicability in Benue State, widely regarded as Nigeria’s “food basket.”
According to her, machine learning tools could revolutionize agricultural practices by improving pest detection and optimizing planting schedules using satellite imagery.
“AI offers us the chance to not only flourish economically but also to achieve food security. However, we must ask ourselves if we are prepared to manage this technology responsibly”, she added.
Idehen also noted that internet access remains a significant barrier to AI adoption in Nigeria.
“For AI tools to be effective, basic digital infrastructure is essential. Addressing this gap must be a priority.
“AI is happening. We have the opportunity to manage this technology revolution responsibly, both in Africa and globally, through innovation and governance”, she said.
In August 2024, the Federal Ministry of Communications, Innovation, and Digital Economy released a draft National Artificial Intelligence Strategy, aiming to position Nigeria as a global leader in AI.

Corlins Walter

Business

We Have Spent N1bn On Electrification -LG Boss

Published

2 days ago

December 20, 2024

The Tide

The Chairman of Emohua Local Government Council, Chief David Omereji, has said the council has so far spent over N1 billion for the electrification of communities in the area.
Omereji said this while addressing staff of the council at the council headquarters recently.
He said the move was part of his administration’s resolve to ensure peace and development of the LGA.
According to him, the Council spent about N29 million on monthly basis for the maintenance of the Emohua Local Vigilante group known as OSPAC, with each member being paid a stipend of N100, 000 monthly.
He diaclosed that 11 out of the 14 wards are currently enjoying electricity, while efforts are on to light-up the remaining ones.
“I also want to use this opportunity to inform the political class for purposes of records and for the understanding of the people that the Council under my watch have done more than enough”, he said .
The Emolga boss explained that all that have been achieved were through the personal effort of the Council, without support from anybody as rumoured in some quarters.
Omereji further reaveled that a number of other projects, including roads, fencing of schools, hospitals, courts premises, and reconstruction of some abandoned buildings at the Council Headquarters are being undertaken by his administration.
He enjoined the people of the area to support his administration’s drive to bring purposeful development to the LGA.
The Emohua Council boss, who reiterated his hatred for noise making, stated that his works would speak for him, and solicited the support of staff of the council and the entire people of the area.
He noted the fact that some people may not be happy with his achievements, saying that he would remain focused, while advising critics of his government to do so constructively with facts and figures.

King Onunwor

Business

Ogoni Rejects NNPC-Sahara OML11 Deal … Wants FG’s Intervention

Published

2 days ago

December 20, 2024

The Tide

The Movement for the Survival of the Ogoni People (MOSOP) has raised some ethical questions over a Financial and Technical Services Agreement (FTSA) between Sahara Energy and West African Gas Limited (WAGL), an affiliate of the Nigerian National Petroleum Company (NNPC).
MOSOP said the agreement was not done in good faith, not in the interest of the Nigerian people, and did not follow due process.
Foremost Ogoni born activist and MOSOP leader, Fegalo Nsuke, who made this known in Abuja, weekend, described the Sahara-WAGL deal as fraudulent, deceptive and an insult on the intelligence and integrity of the Nigerian nation.
Nsuke called on President Bola Ahmed Tinubu to cancel that FTSA between Sahara Energy and WAGL, noting that the agreement is fraught with irregularities and deceptive.
“What Sahara and the NNPC did in the FTSA between Sahara and WAGL is shameful and depicts high level corruption in public service of our country.
“WAGL is an affiliate of Sahara and the NNPC. How then can Sahara go into an agreement with its own affiliate? It’s as good as going into an agreement with itself. This is deceptive and fraudulent”, Nsuke said.
He continued that “Sahara Energy is certainly not a company the Ogoni people want on their soil and we are calling on Mr. President, Bola Ahmed Tinubu, to terminate any deal between the NNPC and Sahara Energy over OML 11, and to allow for an inclusive arrangement that considers a fair treatment of the Ogoni people in the distribution of revenues from natural resource extraction on Ogoni soil.
“The last Ogoni Congress has been unequivocal on the Ogoni demand for justice and has given a clear path to resolve the three decade old conflict between all critical parties.
“It will be good to explore this path to peace and development for Ogoni and for our country”.
Nsuke accused Sahara Energy and the NNPC of frustrating the progress made by MOSOP to achieve a permanent solution to the Ogoni problem.
He urged a presidential intervention with deep consideration for a fair treatment of the Ogoni people in order to permanently address the problem.
He noted that Sahara Energy should give up on the Ogoni area to allow for an engagement in the interest of the country and the people.
Recall that MOSOP and Sagara Energy have recently been engaged in a row in what MOSOP describes as an unholy relationship between Sahara Energy and the NNPC over OML 11.
MOSOP expressly rejected Sahara Energy and called for a fair treatment of the Ogoni people in natural resource extraction in Ogoni.
It noted that Ogoni people, led by MOSOP, paid the sacrifice to take the oil from Shell, hence “the position of MOSOP must be taken into consideration in decisions relating to resumption of oil production in Ogoni”.