[Vision2020] State Budget Deficits

[Jeff Harkins]

  Paying for the music!

After years of deficit financing for state and local government (dems 
and repubs), it is time to begin to pay for the music.

Here is a teaser intro to get folks to focus on the problems we are now 
facing.  Before you gnash your teeth and wring your hands in despair, be 
sure to link to the full article - then let the gnashing begin.

We, as a nation and a republic of states are in serious fiscal 
condition.  Our present situation is NOT SUSTAINABLE.  Each U.S. citizen 
is going to sacrifice - over the next several decades.

*State and local government budgets* faced challenges as the nationwide 
economic downturn that began in 2008 continued to cause budget problems 
in the economy. One of the greatest challenges that budget makers faced 
was lower-than-expected revenues from taxes. In Fiscal Year 2009, budget 
makers were overwhelmed by lower-than-expected revenues from taxes. 
Additionally, public spending at the state and local level is 10 times 
what it was in the 1950's, while private spending is only 5 times what 
it was during the '50s.^[1] A recent report by the Government 
Accountability Office reported the state local gap at $9.9 trillion.^[2]

    * /See also: State budget issues, 2010-2011/


As a report produced by the National Center of State Legislatures 
concluded,

    Lawmakers in virtually every state scrambled to keep their FY 2009
    budgets balanced while at the same time struggling to enact new ones
    for FY 2010. Hemorrhaging revenues drove the massive difficulties
    they faced. No matter how pessimistic revenue forecasts were, actual
    collections seemed to come in lower. This happened over and over and
    over again. Ultimately, states were not just faced with lower
    revenue growth rates, they confronted year-over-year declines in
    actual collections^[3] . 

The Government Accountability Office has said,

" 	... closing the fiscal gap over the next 50 years would require 
action to be taken today and maintained for each and every year going 
forward equivalent to a 12.3 percent reduction in state and local 
government current expenditures. Closing the fiscal gap through revenue 
increases would require action of a similar magnitude ....^[4] 	"

A subsequent report by the National Governors Association and National 
Association of State Budget Officers found that FY2010 presented the 
most difficult challenge for states' financial management since the 
Great Depression.^[5]

In total, states faced a budget shortfall of $113.2 billion in FY 2009. 
As substantial as that is, it is far less than the deficit some have 
forecast for FY 2010. According to one such projection, states could 
face a total shortfall of $142.6 billion this year.^[3] The Government 
Accountability Office (GAO) has said that state and local government 
could be facing a $10 trillion gap over the next several years.^[6]

Federal "stimulus" funds, authorized under the American Recovery and 
Reinvestment Act, helped some states avoid some cuts in programs and 
civil service employment. However, as the entry below explains, that 
short-term fix carries costly consequences as well.^[3]

http://sunshinereview.org/index.php/State_budget_issues%2C_2009-2010
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