Wednesday, January 06, 2010

More on State Budget Woes

by Calculated Risk on 1/06/2010 12:16:00 PM

From Jennifer Steinhauer at the NY Times: New Year but No Relief for Strapped States

[A]t least 36 states struggle to close budget shortfalls and also begin confronting the next fiscal year’s woes.

For many of the states, the new year spells the end to accounting maneuvers, one-off solutions, tax increases and service cuts that were as deep as lawmakers thought they could bear. ...

“A budget gap of 5 percent or 10 percent in any given year is a tough problem,” said Corina Eckl, fiscal director at the National Conference of State Legislatures. “But we’re talking about gaps in excess of 20 percent over multiple years. The size of these gaps is staggering.”

... states averted deeper cuts than anticipated last year because of the federal stimulus package. But those dollars will shrink over the next fiscal year, and unless jobs return and tax revenues rise, or Congress sends them more aid, states will most likely continue to be overextended.
These "staggering" gaps mean more budget cuts, or more tax increases, or another stimulus package ... unless the state economies improve quickly, and that seems unlikely.