State Budgets Facing Huge Shortfalls

Most states are required to balance their budgets. The economic crisis combined with lowered expectation for federal stimulus relief means that the only option left is to start cutting budgets.

"[F]or fiscal year 2010, [the states] will face a $84.3-billion hole, according to the National Conference of State Legislatures. The total shortfall through fiscal 2011 is estimated at $350 billion, according to the Center on Budget and Policy Priorities, a nonpartisan think tank in Washington.

State lawmakers can expect some relief from the federal stimulus package -- but it is far from a cure-all. The version passed by the House of Representatives would cover only about 45% of the projected state deficits. A Senate version of the bill, which has yet to be approved, would, in its present form, offer even less relief.

The budget-cutting plans that have emerged from state capitols so far have a potential effect on almost everyone. Parks will close. Environmental programs will be scaled back. Bus and ferry routes will shut down, possibly sending more drivers onto clogged streets and highways. Schools may go without school nurses, and classes may become more crowded. Sick people who rely on state health programs may instead get sicker."

Full Story: States' only option now is budget pain




What's sad about this is how predictable it always is. Recessions always happen every several years, and they always mean less tax revenue and the choice between cutting services, raising taxes/fees/fines, or both, to balance budgets. All of these options, of course, work against economic growth generally speaking (as does the option of not balancing the budget and running up mammoth debt).

Why is it so hard to save up in the good years for the bad years? Is it because politicians don't want to admit that recessions can and will happen under their watch? Why is it so hard to put away, say, 1% of state revenues every year into a fund that will be used to avoid this dilemma during a recession?

That would take . . . planning. God forbid.

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