By skyforbes 
Thanks for clicking into Governing Market Insights for March. This month we’re tracking the potential impact of several federal policy changes on state and local government spending. Have a comment or a question? Send it to me at [email protected].
Interest among conservative states in work requirements and other new conditions for government benefits recipients could drive the need for significant technology upgrades.
At least 10 states have requested waivers from the Trump administration that would let them place new work requirements on citizens receiving Medicaid. Some states are going even further: Arizona and Maine intend to restrict the amount of time citizens can receive Medicaid benefits, and Wisconsin has proposed mandatory drug tests for Medicaid applicants. If history is a guide, implementing any of these policies will demand costly modification to eligibility systems and other technology. When work requirements were added to welfare programs in the 1990s, states spent millions on IT changes to support them. This story from Governing health writer Mattie Quinn looks at the potential cost of implementing work requirements and other changes to state benefits programs.
One reason why changing eligibility rules is expensive is that many HHS programs rely on old technology systems that are difficult to modify.
Research from e.Republic’s Center for Digital Government shows that the technology supporting Medicaid, child support enforcement and other programs is some of the nation’s oldest. The pace of change in HHS programs is driving the need for more flexible and agile technology that accommodates policy shifts more easily and supports better data analysis to understand the impact of new approaches.
2018 is shaping up to be a banner year for so-called green bonds as states and cities take the lead on fighting climate change.
The tax-exempt bonds, which finance projects meeting certain environmental standards, are issued for things such as low-carbon transit projects and sustainable water management. Experts predict a record $20 billion in green bonds will be issued this year, nearly doubling 2017’s total of $11 billion. Most of last year’s activity occurred in California and New York, which accounted for nearly $10 billion in green bond issuance in 2017. Governing finance writer Liz Farmer examines the green-bond trend here.
Stock market volatility could put new pension pressure on states and localities.
With interest rates at historically low levels since the Great Recession, public pension funds have sought greater investment returns by sinking more money into the stock market. After a long period of stability, a pair of 1,000-point market nosedives in February — followed by a 500-point drop earlier this month — are a wakeup call for pension fund managers. The Wall Street Journal reported that the California Public Employees’ Retirement System (CalPERS), the nation’s largest public pension fund, lost $18.5 billion in value over a 10-day trading period ending Feb. 9, citing figures provided by CalPERS. Although the fund recovered some of that money as the market bounced back, the recent turbulence is a reminder for public officials that they can’t rely too heavily on relatively risky stock investments.
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The new federal tax law passed in December may make it even harder for cities to provide affordable housing.
That’s because Congress diluted a key tax incentive that fuels the construction and rehabilitation of low-cost rental housing. By lowering the corporate tax rate from 35 percent to 21 percent, the new tax law makes it less likely that investors will buy federal Low Income Housing Tax Credits from developers. A lower corporate tax rate means that affordable housing investors — typically banks — will owe significantly less in taxes and have less of a need for the tax credits, which are a primary way states and localities facilitate low-income housing construction. By one estimate, developers will build nearly 235,000 fewer affordable rental units in the next decade because of the tax cut. Governing staff writer JB Wogan takes a closer look at the impact here.
Occupational licensing is getting more attention as government leaders tackle income equality and the changing nature of work.
At issue is the fact that a growing share of the nation’s jobs require a license to perform, which can lock marginalized populations out of well-paying occupations and handcuff policymakers on workforce strategy. A recent report from the National Conference of State Legislatures points out that almost a quarter of American employees are now licensed workers, up from just 5 percent in the 1950s. Colorado is moving in the right direction by centralizing the management of licensing boards and scrutinizing new licensing requirements before they’re enacted. Look for this issue to get more attention as state and local leaders seek to rebalance consumer protection and employment opportunity.