Keating Report: mid-year 2016 forecast on government budgets and spending—Part 1

There’s some growth in government budgets as we head into the third quarter of 2016. Two mayors tell GPN that they are upbeat.

“Sales tax revenues exceeded the previous year’s conservative budget projections, demonstrating that retail sales are continuing to steadily recover from the economic downturn,” says Schaumburg, Ill., Mayor Al Larson (photo at right). The mayor says his village’s current budget (spanning May 1, 2016 through April 30, 2017) projects continued growth in sales tax revenues. Larson says development of new retail establishments as well as continued improvement in the regional economy are helping grow the village’s sales tax revenues.

As part of the FY 2016/17 budget, the village will be issuing $50 million in bonds to fund infrastructure improvements in the North Schaumburg Tax Increment Financing (TIF) District and major roadways throughout the village. This will include new interstate access from the Jane Addams Memorial Tollway and other major roadways throughout the village that are eligible for federal Surface Transportation Program funding.

Things are looking up in the Sunshine State. When he compares the city’s budget to actual spending and revenues, the outlook is favorable, says Pembroke Pines, Fla., Mayor Frank C. Ortis (photo at left). The mayor says his team will continue to be proactive in addressing the cost of employee benefits; he says that expense category is growing and is “uncontrollable.”

Pembroke Pines is experiencing a boom in public infrastructure development. One example is the construction of the city’s Civic Center/City Center Project. “The heart of our new downtown center, this four-story multi-purpose complex features a new city hall, 3,500 seat state-of-the-art performance/conference center and an 11,000-square-foot art gallery,” says the mayor. “The project will soon be completed to enhance the lives of residents and the community-at-large,” he adds.

Government purchases on the upswing in 2016, 2017

Lexington, Mass.-based IHS Global Insight offers some good news to businesses that sell to government. The global forecaster predicts that total government purchases will rise by 2.2 percent in 2016 over 2015. Total purchases will reach $3.26 trillion in 2016, up from $3.18 trillion in 2015, predicts IHS Global Insight in a late May 2016 outlook report.

State and local government purchases will increase to $2.0 trillion in 2016, a 2 percent boost over 2015 totals. Federal purchases, meanwhile, will reach $1.26 trillion in 2016, which is almost 3.3 percent higher than 2015 totals. In 2017, total government purchases will reach $3.36, says IHS.

IHS economist Kristin Reynolds, however, offers some sobering news about federal fiscal conditions along with the above purchases totals. “We expect the fiscal year 2016 federal budget deficit to increase to $554 billion, 26 percent higher than last year. Outlays are expected to grow twice as fast as receipts due to the spending and tax packages approved by Congress at the end of 2015.”  Her firm’s forecast factors in recent federal legislation, including the Bipartisan Budget Act of 2015, the Protecting Americans from Tax Hikes Act of 2015, and the Fixing America’s Surface Transportation (FAST) Act.

Onvia’s “State & Local Procurement Snapshot – Q2 2016” also spotlights public sector budget and spending trends through the second quarter of 2016.

Michael Keating is senior editor for American City & County and the GPN web site. Contact: [email protected]

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