by Bill McBride on 2/16/2009 06:42:00 PM
Monday, February 16, 2009
From the WSJ: California Legislators Reconsider Plan to Close $42 Billion Budget Gap (ht Dwight)
California legislators met Monday to reconsider a proposal to close the state's $42 billion deficit after aborting a vote late Sunday ... that would raise taxes and cut spending. ...And from the AP: Kan. suspends income tax refunds, may miss payroll (ht Mark)
The budget put up to vote during the long-weekend session outlined spending for the next 17 months. In addition to the revenue increases, it proposed cutting $15 billion in spending, including $8.6 billion from education and $1.4 billion from payroll costs, to be achieved in part by furloughing 200,000 state workers at least one day a month.
The impasse has revolved around a bill, out of the nearly 30 in the budget proposal, that would generate $14 billion in revenue by temporarily raising the sales tax by one percentage point, by increasing the gasoline tax by 12 cents a gallon and by adding a surcharge of up to 5% on income taxes, among other steps.
Kansas has suspended income tax refunds and may not be able to pay employees on time, the state's budget director said Monday.There are just 2 of 46 states that the Center on Budget and Policy Priorities is facing a shortfall (of course California has the largest shortfall): State Budget Troubles Worsen
The state doesn't have enough money in its main bank account to pay its bills, prompting Democratic Gov. Kathleen Sebelius to suggest transferring $225 million from other accounts throughout state government. But the move required approval from legislative leaders, and the GOP refused Monday.
States are facing a great fiscal crisis. At least 46 states faced or are facing shortfalls in their budgets for this and/or next year, and severe fiscal problems are highly likely to continue into the following year as well. ...
States are currently at the mid-point of fiscal year 2009 — which started July 1 in most states — and are in the process of preparing their budgets for the next year. Over half the states had already cut spending, used reserves, or raised revenues in order to adopt a balanced budget for the current fiscal year — which started July 1 in most states. Now, their budgets have fallen out of balance again. New gaps of $51 billion (over 10% of state budgets) have opened up in the budgets of at least 42 states plus the District of Columbia.
Posted by Bill McBride on 2/16/2009 06:42:00 PM