State Budget Woes Worsen

Fiscal year 2010 is already off to an inauspicious start, and it appears that things may get worse before they get better. New data released by the Center for Budget and Policy Priorities this week indicate that budget woes are mounting (emphasis mine):

[Fiscal Year 2010] brings an austere continuation of recession-driven cuts in essential services and poor prospects for improvement through 2011, according to a series of updated reports on state budget conditions issued today by the Center on Budget and Policy Priorities.

The reports include new data on state budgets showing that:

– The total shortfall for fiscal year 2010 — including gaps that have been addressed through budget cuts and other measures, and newly emergent gaps — now totals $166 billion across 48 states. Total gaps through 2011 will exceed $350 billion.

– At least 39 states have made cuts that harm vulnerable residents to help close budget gaps.

– The federal economic recovery act is providing needed relief, reducing the size and extent of cuts and closing roughly 40 percent of state budget shortfalls.

Twenty five states have raised taxes this year and another 12 are considering doing so, as states increasingly realize that the budget holes are too big to be filled by cuts alone.

“State policymakers face an increasingly challenging battle against an economy that is still getting weaker,” said Nicholas Johnson, director of the Center’s State Fiscal Project. “There is no letup in sight when it comes to making hard choices.”

An April report on state fiscal conditions released by the National Association of State Budget Officers and the National Governors Association offers a similarly bleak outlook for states in the near term. Reducing the price of government should be the #1 priority of state policymakers if they ever hope to get back on a path of fiscal sustainability.

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