Latest news with #fiscaldiscipline
Yahoo
3 days ago
- Business
- Yahoo
Louisiana House committee passes budget that closes $200 million shortfall without raising taxes
BATON ROUGE — The House Appropriations Committee advanced a $49.4 billion state budget Monday that funds $2,000 teacher stipends for next year, closes a nearly $200 million shortfall and balances the books without raising taxes. To bridge the budget gap, lawmakers pieced together a solution using a mix of cuts, delayed spending and the discovery of unspent or underutilized funds tucked away in various agencies. This included clawing back excess appropriations, redirecting one-time revenues and freezing certain state expenditures. Some of the savings came from blocking state vehicle purchases and combing Medicaid rolls to remove people who have moved out of state. The committee's approach not only avoided tax hikes but also safeguarded critical areas like education and healthcare. The effort won praise from both sides of the aisle, with Republicans applauding the fiscal discipline and Democrats recognizing the protection of key public services and the funding of teacher stipends. At the heart of the plan is House Bill 1, the state's main operating budget authored by Appropriations Chairman Jack McFarland, R-Winnfield. The bill, originally submitted by Gov. Jeff Landry as a standstill plan, was overhauled to address the shortfall and fund the $2,000 stipends for teachers and $1,000 for school support staff, including charter school employees, The stipends that were in jeopardy after Louisiana voters rejected a constitutional amendment in March that would have secured a permanent funding source for the stipends. 'In tough times, families tighten their belts,' McFarland said in a news release. "We made sure the state government did the same — responsibly, and without asking more from taxpayers.' Protecting teacher raises: Louisiana legislative panel funds teacher pay raises in surprise move Income tax plan advances Louisiana House passes bill that could further cut income tax, with constitutional amendment TOPS funding TOPS tweaks trouble cofounder Taylor: 'Let's not throw the baby out with the bath water' The final package included a series of cost-saving measures. Lawmakers blocked $91 million in vehicle and equipment purchases for state agencies, cut $26.3 million in Medicaid spending by removing ineligible recipients and saved $20 million through a statewide hiring freeze ordered by Landry. They also used state reserves to pay down $148 million in retirement debt for the State Police system, generating $25.5 million in interest savings, and eliminated 'high-dosage' tutoring programs, freeing up an additional $30 million. 'We balanced the budget, protected taxpayers, and made government more accountable. And we're just getting started,' said House Speaker Phillip DeVillier, R-Eunice. 'These cuts lay the groundwork for long-term reform and financial stability.' The committee also kept intact Landry's request for $94 million in funding for the new Louisiana GATOR program, an education savings account initiative that allows families to use public funds for private school tuition and other non-public education expenses. The program is a key part of Landry's school choice agenda and is expected to launch in phases. It is controversial among some education advocates and rural lawmakers, who say it could eventually drain money from public schools. McFarland acknowledged the teacher stipends are being funded with one-time dollars and that a long-term solution remains elusive. 'Until then, this is what we had to do, but I don't want to have to do it again,' McFarland said. Democrats praised the bipartisan work needed to achieve this bill. "I want to thank the chairman and administration and everyone who has worked on getting these amendments done, particularly for teacher stipends,' Rep. Denise Marcelle, D-Baton Rouge, said. 'Thank you for looking under tables and around the corners.' Rep. Jason Hughes, D-New Orleans, the vice chairman of the House Appropriations Committee, noted that early childhood education funding remains untouched and pointed to new investments in public safety. Gov. Landry's hiring freeze is expected to save $20 million annually and is seen as a way to preserve healthcare and education spending without deeper cuts. 'The public should know this budget represents no cuts in services,' Hughes said. 'We found surpluses elsewhere. But this is just one step in a very lengthy process.' The budget increases spending by $7 million for domestic violence shelters under the Department of Children and Family Services. The budget also reduces dedications from the State General Fund and officially ends remote work for state employees. If HB1 passes the House as expected, it will move to the Senate Finance Committee for further deliberation. The committee also advanced other key budget bills. House Bill 460 allocates $148.8 million in surplus funds to pay down State Police retirement debt, saving $25.5 million in interest compared to the original plan to spread the money across four systems. House Bill 461 sends 25% of the 2023–2024 surplus to the Budget Stabilization Fund and authorizes emergency spending. House Bill 463 funds ancillary agencies without tapping the State General Fund, while House Bill 647 finances the judiciary. Additional allocations in the budget include $7 million for domestic violence shelters under the Department of Children and Family Services. The budget also reduces dedications from the State General Fund and officially ends remote work for state employees. This article originally appeared on Lafayette Daily Advertiser: Louisiana House Appropriations Committee passes budget, closes shortfall
Reuters
5 days ago
- Business
- Reuters
Japan's government to pledge 'nimble' fiscal action in policy guidelines
TOKYO, May 28 (Reuters) - Japan's government will pledge in this year's policy guidelines to take "nimble policy action" as U.S. tariffs and high inflation impact household finances, according to a draft seen by Reuters. The statement, to be included in Japan's annual economic and fiscal policy guidelines in June, suggests the government could consider compiling a supplementary budget later this year, depending on economic and price developments. The government also plans to reiterate its expectations for the Bank of Japan to achieve the 2% price target in a sustainable and stable manner. The draft guidelines, which form the basis for budget planning, will note that, although the Japanese economy has been recovering modestly, downside risks posed by the U.S. tariffs and rising consumer prices "need to be closely monitored." The pursuit of fiscal discipline should not narrow policy options, the draft said, giving room for swift policy responses such as stimulus measures when necessary. The government will mobilise all measures to achieve wage growth to ensure the transition to a growth-oriented economy driven by wage hikes and investment, the draft said. The draft stated the BOJ is expected to achieve the 2% inflation target in a sustainable and stable manner through appropriate monetary policy in response to economic, price, and financial conditions. A key Japanese government economic panel, the Council on Economic and Fiscal Policy (CEFP), will meet on June 5 to discuss the draft guidelines and finalise them on June 13.
New York Times
22-05-2025
- Business
- New York Times
Bond Market Shudders as Tax Bill Deepens Deficit Worries
The bedrock of the global financial system continued to shudder on Thursday, as President Trump's bill to extend expensive tax cuts and create new ones without significantly slashing spending passed through the House of Representatives. The bill has unnerved investors, deepening worries that the country's debt is becoming unmanageable. Yields on U.S. government bonds, which underpin consumer and business interest rates around the world, from mortgages to corporate loans, have been rising in recent weeks. Yields rise as prices fall, and the higher the yields, the more risk investors perceive in to lending to the government. The 30-year Treasury yield on Wednesday rose as high as 5.15 percent in early trading, its highest since October 2023, before easing back later in the morning. The 30-year yield is trading about 0.7 percentage points higher than its low in April — a huge move in such a short time in that market. Christopher J. Waller, an influential governor at the Federal Reserve, said on Thursday that financial markets are looking for more 'fiscal discipline' from Washington, warning that investors will likely continue to demand higher yields in order to hold U.S. assets. 'We ran $2 trillion deficits the last few years. This is just not sustainable, and so the markets are looking for a little more fiscal discipline,' he said in an interview with Fox Business. 'They're concerned.' Mr. Waller said that investors more broadly were shunning U.S. assets and in turn demanding a 'premium' to buy. That so far has come in the form of yields on government bonds rising, indicating a drop in price. 'There does seem to be a risk-off on American assets across the board, not just government debt, but everything,' said Mr. Waller. That aversion was last on full display when Mr. Trump announced his most aggressive set of tariffs in early April, which he was forced to walk back days later after traditional relationships in financial markets started to break down. As U.S. stocks sold off, so too did the dollar and government bonds, which typically act as safe havens. 'As long as the economy gets back on a good path — the economy starts growing, inflation stays down — you might see a resurge in demand for American assets,' Mr. Waller said. He reiterated that there was still a path for the Fed to lower interest rates this year, barring the return of significantly more onerous tariffs. 'If we can get the tariffs down closer to 10 percent and then that's all sealed, done and delivered somewhere by July, then we're in good shape for the second half of the year,' he said of rate cuts. Investors warn that the fiscal package that eventually passes may end up keeping the Fed on hold for even longer because the measures will at least in the near term support to the economy. Ajay Rajadhyaksha, global chairman of research at Barclays, is still maintaining his call that the Fed will cut once in December, but said it was increasingly plausible that the central bank would opt to do nothing all year. Deficit hawks have warned for a long time about the risks of running large deficits, where the government spends more than it earns in taxes and other revenue. Those fears intensified after interest rates rose rapidly 2022, making cheap debt taken on when interest rates were low suddenly a lot more expensive to maintain long-term. This year, the government will spend more than $1 trillion on interest payments on its debt, more than military spending and twice the government's interest cost from five years ago. Investors had hoped that a Republican sweep of Congress, backed by a president who made cutting government spending a core message of his campaign, would provide the opportunity to meaningfully tackle the federal deficit. Given that backdrop, Thursday's passage of a bill that would extend tax cuts, introduce some new ones, and add more than $3 trillion to the deficit — based on figures from the Congressional Budget Office — weighed on the market. Despite the uneasy mood across Wall Street, financial markets are still functioning smoothly. Officials at the central bank are unlikely to intervene unless that changes dramatically, something Beth Hammack, president of the Cleveland Fed, made clear earlier this week at the Atlanta Fed's conference on financial stability. She described the bar for the Fed to step in as 'incredibly high." 'It needs to be a level of dysfunction where participants are unable to conduct business, banks are unable to lend credit,' she said in a moderated discussion. 'When we need to help support the financial markets is when there can be meaningful transmission into that real economy.'
Asharq Al-Awsat
21-05-2025
- Business
- Asharq Al-Awsat
Alibrahim: Saudi Arabia Adopting New Spending Approach that Balances Discipline, Boldness
Saudi Arabia has adopted a more strategic spending approach that blends fiscal discipline with bold investment in key Vision 2030 initiatives, according to Minister of Economy and Planning Faisal Alibrahim. The shift reflects the Kingdom's broader commitment to economic diversification and long-term stability, moving away from reliance on oil revenues as the primary budget driver. Saudi Arabia remains well-positioned to navigate fluctuations in oil prices, thanks to its robust financial reserves and forward-looking planning, said Alibrahim. He noted that the Kingdom's budget is no longer tethered solely to oil income, but is instead guided by national priorities within the energy sector and beyond. Speaking at the Qatar Economic Forum on Tuesday, the minister highlighted how Vision 2030 is shaping a comprehensive and ambitious transformation of the Saudi economy. Other Gulf nations are undertaking similar reform paths, collectively strengthening the region's resilience and institutional capacity, remarked. 'Our economic planning is not just focused on the next 12 months,' Alibrahim said. 'We are thinking long term — a mindset shared across the Gulf Cooperation Council (GCC).' The Kingdom's new approach also involves substantial investment in institutional development, designed to generate sustainable returns and maintain momentum behind reform efforts. This resilience, he said, is essential to withstanding global shocks and ensuring a stable environment for growth. Alibrahim described the Gulf region as a 'bright spot' in the global economy, citing its ability to pair strategic vision with effective execution. He credited strong leadership and popular support as key drivers of the region's ongoing progress. Saudi Arabia's transformation is not only about shifting from consumption to production and export, but also about cultivating innovation and attracting the capital and talent required to power that shift, stressed the minister. Turning to foreign direct investment (FDI), Alibrahim framed it as a long-term engine for growth. He pointed to a range of positive indicators, including an increase in investment licenses, a rise in the number of regional headquarters established in the Kingdom, and a growing pipeline of active deals. 'Our goal is to raise FDI to 5.7 percent of GDP by 2030, which amounts to 100 billion riyals annually,' he said. To achieve this, Saudi Arabia is implementing over 900 business environment reforms aimed at enhancing transparency, competitiveness, and investor confidence.
Reuters
20-05-2025
- Business
- Reuters
New Zealand's budget cuts punish public sector, business and workers
WELLINGTON, May 21 (Reuters) - At a trendy cafe in downtown Wellington, job seekers gather to share tips on how to find work in New Zealand's capital, where deep government spending cuts have led to thousands of public sector job losses and squeezed the city's economy. Rebecca Thomson, a communications specialist who started the informal support group after she couldn't find work as a government contractor during the cuts, says competition for positions is fierce. "We were told survive until 2025 and it will get better. Well, we're now in May 2025 and it doesn't feel better," said Thomson, who is currently doing paid freelance work. New Zealand's conservative coalition government releases its annual budget on Thursday and is expected to continue to push fiscal discipline with many ministries not expected to see budget increases. Spending cuts since December 2023 have been felt across the wider economy but perhaps most acutely in Wellington, a city of nearly 210,000 where the government has historically been a major employer. House prices in Wellington have plunged 6.8% over the past year, far exceeding the national decline of 1.1%. Population growth stagnated in 2024, contrasting with a 1.7% increase nationwide. Consumer and economic sentiment in the city remains lower than in many other regions, with businesses and residents expressing concern over the city's prospects. Prime Minister Christopher Luxon was elected in 2023, promising to cut "wasteful spending". His campaign for fiscal discipline preceded a significantly more high profile push by U.S. President Donald Trump and tech billionaire Elon Musk to make Washington more efficient, which has led to the loss of thousands of U.S. public sector jobs. "It's pretty clear that the impact on Wellington, from the government baseline spending cuts, and also the reduction in spending on contractors, has been quite negative," said Westpac New Zealand Chief Economist Kelly Eckhold. "You can see that in pretty much any indicator of activity or house prices going on in Wellington right now." According to data from the Public Service Commission, public sector employment fell 4.2% in the year leading up to December 2024. Additionally, the government slashed NZ$300 million ($177.63 million) or about a third of the budget allocated to hiring contractors in the year to June 30, 2024, further tightening the purse strings. Several infrastructure projects were cancelled, including much of Wellington's flagship public transport project. Baseline spending at the upcoming 2025 budget is expected to be smallest in a decade. While the government has foreshadowed an increase in infrastructure spending, the overall fiscal strategy remains tight and is unlikely to help Wellington's economy. Finance Minister Nicola Willis said in a speech earlier this month that a tight fiscal strategy was necessary to keep interest rates low and ensure New Zealand continues to be seen as a good place to invest. That fiscal prudence combined with New Zealand's relatively low government debt is seen as safeguarding the country's economic stability and keeping a favourable sovereign credit rating. However, opposition leader Chris Hipkins said the cuts have led to increased spending on unemployment benefits. "Now is exactly the time for government to make the investments we need in infrastructure, housing, health, and our environment so we are creating jobs and get New Zealand moving again," Hipkins argued in a pre-Budget speech. But while the cuts have led to public sector strikes, the latest polls indicate that the current coalition of the National Party, New Zealand First and ACT would retain power in an election. Economists say fiscal tightening is creating ripple effects across the economy. Ganesh Nana, former commissioner of the now-defunct Productivity Commission, and 14 other economists, wrote to the prime minister and finance minister in November, warning their approach risked "a long-lasting hollowing-out" of business. "When redundancies occur, affected individuals don't simply wait for the private sector to step in," Nana told Reuters. "They often seek opportunities abroad, leading to an immediate loss of capacity for the New Zealand economy." Shay Peters, chief executive for recruiter Robert Walters in New Zealand and Australia, said there was general nervousness in the contractor community for the next financial year, which starts July 1. "In Wellington, we're seeing institutionalised hospitality organisations shutting down," he said. "It's just pretty dire." Emily Turner, who has been working in various public service jobs for 25 years, finished her contract as a strategic communications manager at the Workforce Development Council in Wellington last June and thought she'd have work by Christmas. She is now living off her savings and has been unable to add anything to her retirement fund. Turner said she'd be keen to leave Wellington but with a mortgage and lower house prices, such a move is not an option. "I'm in a financial trap," she said. ($1 = 1.6889 New Zealand dollars)
