The changing class divide [feedly]

The changing class divide
http://stumblingandmumbling.typepad.com/stumbling_and_mumbling/2017/06/the-changing-class-divide.html

Social class has become less important as an influence upon voting behaviour. This is one under-appreciated feature of last week's election.

Lord Ashcroft's polls show that the social class AB split 43%-34% between the Tories and Labour. That meant Corbyn's Labour got a higher share of the well-off's vote than Blair's Labour got in 1997, when it got 31%. Labour's wins in Kensington and Canterbury are the most spectacular manifestations of this.

The difference between Blair and Corbyn is that Blair did far better than Corbyn among the working class. The DE group split 59-21 for Labour in 1997 but only 45-33 in 2017.

This seems to conflict with decades of conventional wisdom. A so-called "hard left" Labour leader has had support from a wider class base than a so-called "modernizer" who consciously tried for such classless support.

How can this be?  I'd suggest three reasons.

One is Brexit. The ABs voted 57-43 for Remain, whereas the DEs went 64-36 for Leave. May's hard Brexit thus alienated some ABs, and made Labour's softer stand on Brexit more attractive.  

Secondly, Corbyn's domestic policy was one of universalism more than sectarian class war. His offer of free childcare and the abolition of university fees appealed to many ABs. By contrast, his failure to promise to raise working tax credits meant he was offering relatively little to the DEs. John Rentoul has a point that Corbyn was insufficiently radical – but therein perhaps lay some of his appeal.

Thirdly, Corbyn's promise to tax the very rich appealed to those ABs (the majority) earning less than £80,000.  Reference group theory implies that people compare themselves with those like themselves. So, someone on say £50,000 a year might ask: "why is that idiot earning twice as much as me when he's no smarter?" Many ABs, I suspect, are more aware than the DEs that many of the very rich are incompetent rent-seekers rather than the "wealth creators" of Tory myth. A DE voter, on the other hand, has almost no contact with the rich but is instead irritated by benefit claimants.

This tendency is exacerbated by another – that, as Rick said, the middle classes aren't as posh as they used to be. Many work long hours in unfulfilling jobs for oppressive bosses with no hope of buying a decent house.  For them, Corbynite talk of rent controls and housebuilding was an attractive offer relative to a Tory party than was offering nothing.

It's in this context that class still matters. Yes, the Tory-Labour split is no longer a class split. But this is because the class basis of Toryism has diminished. What we've seen in recent years is a hollowing out of the middle class. A rising take by the top 1% has been accompanied by the middlingly rich becoming less bourgeois: their incomes have fallen relative to the worst off, as I suspect, have their working conditions. This has made ABs more amenable to Labour.

In this sense, perhaps the Tories have a deeper problem than merely yet another laughably inept leader. Their problem is that they no longer articulate the interests of the class they once did, because that class has changed. Ironically, they have become the victims of the inequality that has seen the top 1% (or perhaps 0.1%) pull away from the rest of us.

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Urbanization 2.0 [feedly]

Urbanization 2.0
https://www.project-syndicate.org/commentary/urbanization-digitization-future-cities-by-carl-bildt-2017-06

Urbanization 2.0

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CHICAGO – We are now in the final days of the industrial age. Just as the second generation of steam engines propelled the Industrial Revolution forward, so, too, are new technologies advancing today's digital revolution. But as technology races ahead of us, it is difficult to anticipate what the future holds.

One thing we do know is that the future will be shaped by two key trends: digitization and urbanization. And the possibilities introduced by the former will likely help us overcome the problems associated with the latter.

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When the Industrial Revolution was first gaining momentum at the beginning of the nineteenth century, only a small percentage of the global population lived in cities. The world was still predominantly rural and agricultural, as it had been for thousands of years. But as industrialization accelerated, so did urbanization, as impoverished farmworkers flocked to factories.

We are now in another period of epochal change, and urbanization is accelerating again. In 1950, approximately one-third of the planet's 2.5 billion people lived in cities, whereas today, just over half of the world's 7.5 billion people do. And by 2050, when the global population is expected to reach nine billion, an estimated two-thirds of all people will live in cities.

Urban areas are magnets for young people and entrepreneurs, because they provide a wide range of opportunities and dense professional and social networks. It is no coincidence that 80% of economic output originates in cities: urbanization is the engine of economic growth.

But while it is easy to focus on success stories such as Singapore and Dubai, or on the impressive features of cosmopolitan centers such as New York or London, urbanization is not without its challenges.

By 2050, some 600 million people will live in the world's 25 largest cities, none of which are in the European Union. Most are in Asia, followed by Africa, including Karachi, Pakistan; Kabul, Afghanistan; Khartoum, Sudan; and Kinshasa, in the Democratic Republic of Congo. And some believe that by 2100, Lagos, Nigeria, will be the world's largest city – showing how quickly Africa is catching up.

At the recent Chicago Forum on Global Cities, policy thinkers and practitioners – including past and current mayors from Amman, Chicago, Prague, Lahore, Rio de Janeiro, and Toronto – met for a couple of days to discuss common challenges on the road ahead. They all agreed that many solutions to future problems will come not from national governments, but from municipal and regional-level policymakers.

Many cities and states in the United States are already bringing this point home, by ignoring US President Donald Trump's renunciation of the Paris climate agreement, and doubling down on their own efforts to reduce carbon dioxide emissions and achieve energy sustainability. Indeed, Pittsburgh Mayor Bill Peduto and Paris Mayor Anne Hidalgo have now joined forces to combat climate change, giving the lie to Trump's claim that he was elected to "represent Pittsburgh, not Paris."

Climate change is one of three major challenges that will confront us in this new period of hyper-urbanization. Because all cities depend on energy, more needs to be done to improve sustainability and efficiency. Municipal and regional governments will need to step up their efforts to curb energy use, and introduce new green technologies, particularly in more rural areas.

The second challenge will be to address the effects of new digital technologies that are generally associated with the so-called sharing economy. Hardware and software applications that provide on-demand transportation, delivery, hospitality, and other services will revolutionize how cities operate and are organized; but adapting to these changes will require innovative new policies.

The third challenge relates to migration and its attendant security concerns. Global migration will likely continue to increase in the coming decades, with the very rich and the very poor alike flocking to megacities. Without the policies and infrastructure in place to absorb these new arrivals, megacities could fail, and degenerate into urban jungles that pose a security threat to surrounding regions and the world beyond.

Addressing these challenges will require deeper dialogue among global cities themselves. In the recent discussions in Chicago, there was a general sense that national governments, while important, do not approach most of these issues practically, or with the urgency they require. The Chicago dialogues, on the other hand, epitomized practicality, by finding common ground across wide geographic and cultural boundaries.

This implies that we should be careful not to exaggerate the differences between the most and the least advanced global cities. Security solutions in Toronto might very well be applicable in Karachi; and digital services in Singapore could eventually take root in Kabul.

Just as industrialism ushered in a new age for cities and countries, so, too, will digitization. To see the future that is taking shape, one need only look to the cities that are already shaping it.

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Medicaid Per Capita Cap Would Disproportionately Harm Some States [feedly]

Medicaid Per Capita Cap Would Disproportionately Harm Some States

http://www.cbpp.org/research/health/medicaid-per-capita-cap-would-disproportionately-harm-some-states

http://www.cbpp.org/research/health/medicaid-per-capita-cap-would-disproportionately-harm-some-states

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Our Oceans are in Crisis – Here are 5 things we can do to save them [feedly]

Our Oceans are in Crisis – Here are 5 things we can do to save them
http://www.globalpolicyjournal.com/blog/14/06/2017/our-oceans-are-crisis-%E2%80%93-here-are-5-things-we-can-do-save-them

Our Oceans are in Crisis – Here are 5 things we can do to save them

Nina Hall - 14th June 2017

Nina Hall on the state of the world's oceans and what we can do about it.

Three billion people rely on seafood as their primary source of protein, according to the Marine Stewardship Council.

About 70% of the air we breathe is produced by marine plants, and 97% of the Earth's water supply is contained in the oceans.

They are the biggest regulator of the planet's climate, making it a very comfy place to be for homo sapiens.

And yet, the world's oceans are choking in plastic, are fished to depletion, and warming waters melt ice caps and threaten marine life.

The good news is that the oceans have finally made it into the headlines.

The UN is currently hosting its first ocean conference to support the implementation of Sustainable Development Goal 14: conserve and sustainably use the oceans, seas and marine resources for sustainable development.

Not since the 1982 passing of the Law of the Sea, have so many heads of state convened to discuss the future of the world's oceans, including their effects on economic growth, human health, and the achievement of the SDGs.

Individuals, too, can make a difference.

Driving change from the bottom up can often be the fastest way to take action. Here are five ways we can all help secure the future of our seas:

1. Don't use disposable plastic, and avoid plastic packaging

Every year more than eight million tonnes of plastic are dumped into our oceans, threatening marine life as well as affecting people's health through the toxic chemicals contained in plastic, which accumulate in the seafood and fish we consume. By 2050, there could be more plastic than fish in the sea, according to a joint World Economic Forum and Ellen MacCarthur Foundation report.

Around 50% of the 300 million tonnes of plastic produced every year is used just once, then thrown away.

Each of the 500 billion plastic bags used worldwide annually has a working life of only 15 minutes.

Plastic containers alone account for 14% of all litter.

It takes 0.25 of a litre of oil and six litres of water to produce a one litre plastic bottle.

What can you do about this?

Choose paper or glass containers over plastic packaging when possible.

Avoid plastic bags and bottles, disposable cups, cutlery, straws and coffee pods.

 

2. Produce less waste

While plastics are the most common man-made objects found in the sea, almost all of your rubbish ends up in the ocean – six million tonnes a year, which is about the same as a million elephants!

Marine species worldwide become entangled in, or consume, fishing line, nets, ropes and other discarded equipment.

Overall, we are buying too much stuff, and can consume far less. Reuse and recycle!

Ask yourself: do I need a phone, a tablet, a laptop and a desktop computer?

How many shoes can I possibly wear?

Avoid beauty products with lots of chemicals, which are flushed down the sink into our rivers and end up in the oceans.

Share and pass on baby and kids' clothes and toys and fix the TV instead of buying a new one.

 

3. Eat less fish

The oceans are overfished, and according to the UN's Food and Agricultural Organisation (FAO), 32% of the world's fish stocks are exploited beyond their sustainable limits (see chart below).

Up to 90% of all large predatory fish such as cod, sharks, halibut, swordfish, marlin, grouper and tuna have been depleted.

The solution? Eat less seafood and fish.

When you do eat it, choose sustainably caught or farmed varieties.

Organisations such as the Marine Stewardship Council, Seafood Watch, the WWF, and others provide useful consumer guides on what to buy.

 

 

4. Reduce your carbon footprint

Increasing levels of carbon dioxide in the atmosphere contribute to rising global temperatures, including a warming of the oceans (Figure below).

As a result, our seas become more acidic, leading to widespread coral bleaching, for example.

Reducing the amount of CO2 each of us emits into the atmosphere might sound futile, but there are many ways to make a difference.

• Drive less and drive better. Studies have shown 30% of the difference in miles per gallon is due to driving habits alone. Carpool, bike, walk short distances.

• Watch what you eat and try to buy local. Buy regional vegetables and fruits and reduce the amount of meat and fish you consume.

• At home, insulate your house, watch your water and electricity consumption, use compact fluorescent light bulbs, unplug your electronics, and think about how many appliances you really need.

5. How green is your pet?

If you own a cat or dog, its food and waste can badly impact the oceans.

A 2008 study found that the pet food industry uses 2.48 million tonnes of forage fish each year for wet cat food alone.

Forage fish, such as sardines, anchovies and herring are eaten by top ocean predators such as tuna, cod and halibut, whose populations have plummeted by up to 90%.

Also, do not flush cat litter down the toilet as it can contain pathogens harmful to marine life.

If you own an aquarium, do not buy saltwater fish caught in the wild and never release your pet fish back into the ocean.

Implementing global strategies to keep the oceans healthy is, of course, the most complex and colossal of tasks, reflecting the immense size and huge influence of our seas on the planet as a whole.

Therefore, we need to tackle it from all sides.

There is not the one miracle idea, which will solve all problems; instead we need myriad solutions.

We know what the problems are, and, in many cases, we even know what the solutions could look like. So now is the time to act.

The oceans belong to all of us and we can all make a difference.

 

 

Nina Hall, Journal Manager, Frontiers. This post first appeared on the Agenda blog.

Photo credit: Charos Pix via Foter.com / CC BY-NC-SA

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The Universal Basic Income Discussion [feedly]

The Universal Basic Income Discussion
http://www.globalpolicyjournal.com/blog/13/06/2017/universal-basic-income-discussion

The Universal Basic Income Discussion

Silvia Merler - 13th June 2017

What's at stake: the concept of a Universal Basic Income (UBI), an unconditional transfer paid to each individual, was prominent earlier this year when Finland announced a pilot project. It's now back in the discussion as the OECD published a report illustrating costs and distributional implications for selected countries. We review the most recent contributions on this topic.        

The OECD recently published a policy brief and a methodological note looking into the cost and benefits of adopting Basic Income (BI) as a policy option. The simplest way of introducing a BI would be to take existing cash benefits paid to those of working age and to spread total expenditure on these benefits equally across all those aged below normal retirement age. The resulting BI amount would be very much lower than the poverty line for a single individual. Therefore, without any additional taxes, a budget-neutral BI will be very far from eradicating poverty.

Source: OECD

A perhaps less ambitious alternative may be to use the levels of guaranteed minimum-income benefits (GMI) in existing social protection system as an initial target value for a BI. However, many individuals receive benefits other than a GMI to pay for additional costs for specific needs that they have and they would lose out even more from a flat-rate BI. So it would be likely desirable to retain some targeted cash transfers, but this would require even greater reductions of BI amounts if expenditures are to be kept at current levels. Thus a BI at socially and politically meaningful levels would likely require additional benefit expenditures, and thus higher tax revenues to finance them.

The OECD  simulations for four countries (Finland, France, Italy and the UK) show that although a universal basic income is simple, existing benefits are not, and replacing them with a single flat rate benefit produces complex patterns of gains and losses. Those receiving social insurance benefits would normally lose out from the replacement of those with a universal basic income at GMI levels. Those not qualifying from any social benefit under existing policies would benefit as long as the increase in benefits exceeds the corresponding increase in their taxes. Lower-income households are more likely to receive means-tested income support so they are actually less likely to gain from a BI set at a similar level to GMl.

Source: OECD

Robert Greenstein at the Centre on Budget and Policy Priorities looked specifically at the case of the US, for which Charles Murray proposed that every citizen age 21 and older could get a $13,000 annual grant deposited electronically into a bank account in monthly installments, $3000 of which should be used for health insurance, leaving every adult with $10,000 in disposable annual income for the rest of their lives. Greenstein points out that with over 300 million Americans today, an UBI of $10,000 a year would cost more than $3 trillion a year. This single-year figure equals more than three-fourths of the entire yearly federal budget and it's also equal to close to 100 percent of all tax revenue the federal government collects. UBI's financing challenges raise fundamental questions about its political feasibility, both now and in coming decades. UBI's supporters generally propose UBI as a replacement for the current "welfare state", which may  increase poverty and inequality rather than reduce them. Some UBI proponents may argue that by ending current programs, we would reap large administrative savings that we could convert into UBI payments. But Greenstein thinks that's mistaken because the major means-tested programs – SNAP, Medicaid, the EITC, housing vouchers, Supplemental Security Income (SSI), and school meals – administrative costs consume only 1 to 9 percent of program resources, and their funding goes overwhelmingly to boost the incomes and purchasing power of low-income families.

Berk Ozler at the World Bank refers to a paper by van de Walle, Ravallion and Brown, who examine the best methods available for targeting poor people to see how they would fare in reducing poverty. The policies evaluated include a universal basic income, targeting on the basis of basic proxy-means tests (PMT), improvements to PMT they propose, and some simple categorical targeting options (such as targeting the elderly, children, widows, etc.). They find that these would reduce poverty by less than 25% depending on the choice of poverty measure. Universal Basic Income (UBI) would reduce the Headcount Index by 14.5 percent. Categorical targeting performs very similarly to UBI. They do significantly better when caring about distribution-sensitive measures of poverty (43 percent reduction in the Poverty Gap) – but only assuming an improvement upon the common PMT methods by using poverty quantile regressions or means from panel data when available. The difference between the performance of UBI and the best targeting method looks small. But that is a little deceiving: in a country of 25 million people, such as Cameroon, reducing the Headcount Index from 17.1% to 15.4% allows close to half a million people escape poverty.

Shanta Devarajan offers three reasons in favour of a Universal Basic Incomes. First, efficient use of natural-resource rents. Most of the oil-rich countries in sub-Saharan Africa suffer from poor public-spending outcomes. One reason is that oil revenues go directly to the government without passing through the hands of the citizens. If the oil revenues were transferred directly to citizens, with government having to tax them to finance public spending, citizens would know the magnitude of oil revenues and they would have a greater incentive to monitor how their tax money is being spent. Even without these changes, a simple transfer of 10 percent of oil revenues could effectively eliminate poverty in several oil-exporting countries.

Second, improving the welfare of the poor. Replacing inefficient subsidies with cash transfers would ensure at the very least that the poor are getting the intended monetary benefit. But it could also be empowering. Targeting would be preferable in principle, but in practice there are so many problems in identifying the poor that a universal scheme may do just as well. Third, adjusting to labour-saving technologies. The dilemma is that with these technologies productivity will increase but many people will lose their jobs. Managing this transition is difficult from an economic, political, and moral viewpoint. A system where part of the increase in productivity is taxed, and then distributed as cash transfers to all citizens, whether they are working or not, could help resolve some of the tension.

Rick McGahey at INET says the UBI debate should focus on the long-term weakening of labour's bargaining power. Much of the current interest in UBI stems from a belief that technology is eliminating jobs more rapidly than new ones can be created, and that future job growth will be much lower. McGahery argues that the assumption that technology will be so disruptive as to justify discarding existing welfare state and other labour market institutions for a UBI should be treated with caution. Politically, that could result in an alliance with libertarian advocates of a UBI who want to eliminate the welfare state and use the funds to provide cash grants to individuals, with the ultimate goal of reducing public spending. Instead, the UBI debate should focus on the strengthening of business' economic power over labour over a more than three-decade period.  Rather than a historically unique event, advanced technology may just be the latest factor impeding labour's ability to bargain by contributing to weaker demand and growing inequality.

Nathan Keeble at Mises Wire argues that UBI would not create incentive to work, help solve unemployment, or alleviate poverty, and it could turn out to be worse in the long run than traditional, means-tested welfare systems. First, UBI does not eliminate the disincentives to work that are inherent in welfare programs; it simply moves them around as this program must be financed, and any welfare system, including the UBI, is necessarily a wealth redistribution scheme.The progressive taxation that is necessary to finance a UBI means that the more a person earns, the higher percentage of their wealth will be taken from them. The work disincentives are therefore still very much present in the tax system. They've simply been transferred onto different, higher income groups of people. Moreover – Keeble argues – UBI diminishes the power of consumers in directing the marketplace, as it would subsidize non-productive activities.

Bryan Capland and Ed Dolan had a long exchange earlier this year, on how libertarians should see UBI. Capland first argued that while dropping multi-faceted means-testing that characterises other types of social spending would reduce moral hazard, it would also greatly increase the number of eligible recipients. He declared himself "baffled that anyone with libertarian sympathies takes the UBI seriously", because the welfare state is already unsustainable, largely because our means-testing by age and health isn't stringent enough. Doland took on the challenge and offered a taxonomy of three kinds of libertarians who might take a UBI very seriously, arguing that UBI could very well be a policy for pragmatic critics of well-intentioned but ineffective government, for classical liberals, and for advocates of personal freedom.

 

 

 

 

Silvia Merler, an Italian citizen, joined Bruegel as Affiliate Fellow at Bruegel in August 2013. Her main research interests include international macro and financial economics, central banking and EU institutions and policy making. This post first appeared on the Bruegel blog.

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Going Private: The Trump Administration's Big Infrastructure Plan [feedly]

Going Private: The Trump Administration's Big Infrastructure Plan
http://cepr.net/publications/op-eds-columns/going-private-the-trump-administration-s-big-infrastructure

Going Private: The Trump Administration's Big Infrastructure Plan

Dean Baker
Truthout, June 12, 2017

See article on original site

The Trump administration's "infrastructure week" ended whatever hope any of us had that something positive could come out of this administration. It's clear that his promise for rebuilding the country's infrastructure is just another Trump scam.

During his campaign, Trump had made a point of complaining about the poor state of the country's infrastructure. He had a point, as both the federal and state and local governments have cut back spending in recent years.

In the case of state and local governments, there was often little choice. Loss of tax revenue due to the recession and slow recovery, coupled with balanced budget requirements in state constitutions and city charters, meant that there was little money to spend.

In the case of the federal government, the deficit hawks insisted that we reduce the deficit, even though there is no evidence that high deficits are pushing up interest rates and/or leading to inflation. Interest rates continue to be extraordinarily low in both real and nominal terms. In fact, they were far lower in the late 1990s when the federal government was running budget surpluses.

Inflation continues to run below the Federal Reserve Board's 2 percent target. In fact, the last few months it appears to be slowing slightly. Given this evidence, there seems little basis for the concern that budget deficits are too large.

Nonetheless, the domestic discretionary share of the budget, which includes everything from education to the Justice Department to infrastructure and public spending on medical, and other research, was cut back sharply by the deficit hawks.

The baseline that Trump was working from projected that domestic discretionary spending in 2027 would be almost 20 percent less than it had been in 2010, even as the economy grew by close to 40 percent. Trump's budget cuts domestic spending even further.

Its projection for 2027 is a bit more than half of the 2010 level of spending. This is why Trump's promise of a big infrastructure program seems like such a joke. While his budget does provide for modest increases in infrastructure spending in the next five years, these are quickly phased down to near zero.

Furthermore, since there are large cuts in other areas of domestic discretionary spending, total investment spending is going down sharply in the Trump budget. So we might see a few more dollars spent on roads and bridges, but we will see sharp cuts in spending and research in health care and other areas. We will also see sharp cuts in federal support for student loans and other areas of education.

But Trump's big ace in the hole is that he will rely on the private sector to provide funding for infrastructure beyond the amount he put in the budget. This is the idea that we will privatize assets like highways and water systems so that the private sector can profit from them.

This sounds like a great idea for someone who has spent a lifetime running rip off schemes. We actually have considerable experience with privatizing public assets and most of it is not good. In 2008, the city of Chicago privatized its parking meters. It sold off the stream of revenue from the meters for the next 75 years to a consortium led by Morgan Stanley. Morgan Stanley is doing very well, the city less so.  

In another example, California contracted with three private companies to build express lanes on an Orange County highway in 1995. As congestion increased, the state's efforts to build additional roads and public transit were blocked by a non-compete clause in the contract with the companies. To resolve the situation the state eventually had to buy out the contracts from the companies.

These and many other experiences with failed privatization should dispel the myth that privatization amounts to any sort of free lunch for anyone except Donald Trump's family and friends and well-positioned political allies. This should be apparent from thinking through the logic.

Private markets are very good at supplying a good or service that is produced repeatedly and in large numbers for a diverse group of customers. It makes good sense to have Dell, Apple and many other companies to compete to see who can provide the best computers at the lowest price.

But this logic does not apply when there is a unique product such as a road from Los Angeles to San Francisco or a water system for the city of Flint. In this case, we are talking about a monopoly, where one company will control the supply.

We can either have the government be the monopolist, owning the highway or the water system, or we can let a private company be the monopolist and have the government be the regulator of the monopolist. (We know an unregulated monopolist rips off its customers. That is what basic economics predicts.)

If we think the government is run by buffoons who can't do anything right, it is hard to see how the buffoons are supposed to rein in the fast-moving contractors in the private sector. Putting private firms in a position to take advantage of the lack of effective oversight is likely to make things worse, not better.

This is a lesson we have seen repeatedly in the United States and throughout the world. Donald Trump is incredibly ignorant of history and almost everything else, but Congress isn't.

We should expect better of Congress. The story of mass privatization of assets is a story of rip offs and corruption. Members of Congress should know this.

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More Budget Cuts on the Table [feedly]

More Budget Cuts on the Table
http://www.wvpolicy.org/more-budget-cuts-on-the-table/

As the extended special session drags on, with no agreement on a tax bill yet, the House has made adjustments to the governor's budget plan submitted at the beginning of the special session.

To recap, after vetoing the budget passed during the regular session, which was balanced by taking $90 million from the Rainy Day Fund and major cuts to Medicaid and higher education, the legislature went into a special session and the House, the Senate, and the governor have all been in a stand off over personal income tax cuts and sales tax increases ever since.

With no deal on revenue, the governor introduced a new budget with HB 115. HB 115 made a number of cuts compared to the governor's original proposal, including reducing the Save our State Fund to $15 million and cutting higher education by $5.4 million. At the time, HB 115 would have required the legislature to raise about $260 million in revenue to balance the budget.

Yesterday, the House introduced a committee substitute for HB 115, with $78 million in further cuts. While the full text of the bill is still not available, a summary was posted online.

Here are the major changes in the committee substitute for HB 115 compared to the governor's version.

• The Save Our State Fund is eliminated fully. The governor's originally called for a $105.5 million SOS Fund, and then reduced it to $15 million at the start of the special session. The House bill eliminates it entirely.
• $28.3 million in further cuts to the Department of Education, including $8 million in program cuts and $20 million cut from canceling the teacher's pay raise. HB 115 already included $44.7 million in savings from the unfunded liability smoothing.
• $1.7 million in further cuts to the Department of Education and the Arts, including $941,294 cut from Education Broadcasting Authority.
• $33 million cut from DHHR. According to the summary posted online, this includes $13 million cut from Medicaid.
• No further cuts to Higher Education, leaving Higher Ed at $13.8 million below FY 2017's funding.

The Senate also introduced their plan for the budget through an amendment to SB 1013. The Senate's bill also makes cuts to the Governor's special session proposal, but goes much further than the House, cutting by $254 million.

Here are the major changes in the amendment to SB 1013 compared to the Governor's introduced version of HB 115.

• The Save Our State Fund is fully eliminated, plus an additional $250,000 cut to the Division of Energy.
• The teacher pay raise is canceled, cutting $20 million from the Department of Education.
• $85,813 cut from the Education Broadcasting Authority.
• $118 million from Medicaid.
• $5.6 million cut from the Bureau of Senior Services.
• $19.3 million cut from Community and technical colleges, which would be a 30 percent reduction from FY 2017.
• $75.2 million cut from Higher Education, which would be a 22 percent reduction from FY 2017.

The figure below shows the levels on General Revenue expenditures from the various budget proposals in both the regular and special session.  The latest version from the House is $223 million below the governor's original proposal, and is very close to the House's proposal during the regular session. Even the governor's special session proposal is $155 million below the original proposal. The Senate's proposal is $409.9 million below the governor's original proposal, and is even below the budget that was vetoed by the governor at the end of the regular session.

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