Thursday, March 11, 2010

States Facing Deeper Budget Cuts in 2011

The Center on Budget and Policy Priorities recently released a report on state budget cuts caused by decreasing tax revenues. Over 45 states have already made deep cuts, and in 2011, another round of cuts is expected:

With tax revenue still declining as a result of the recession and budget reserves largely drained, the vast majority of states have made spending cuts that hurt families and reduce necessary services. These cuts, in turn, have deepened states’ economic problems because families and businesses have less to spend. Federal recovery act dollars and funds raised from tax increases are greatly reducing the extent, severity, and economic impact of these cuts, but only to a point.

The cuts enacted in at least 45 states plus the District of Columbia in 2008 and 2009 occurred in all major areas of state services, including health care (29 states), services to the elderly and disabled (24 states and the District of Columbia), K-12 education (29 states and the District of Columbia), higher education (39 states), and other areas. States made these cuts because revenues from income taxes, sales taxes, and other revenue sources used to pay for these services declined due to the recession. At the same time, the need for these services did not decline and, in fact, rose as the number of families facing economic difficulties increased.

These budget pressures have not abated and, in fact, are increasing. Because unemployment rates remain high — and are projected to stay high well into next year — revenues are likely to remain at or near their current depressed levels. This is likely to cause a new round of cuts. Based on new, gloomy revenue projections, governors have begun issuing their budget proposals for the 2011 fiscal year (which begins on July 1, 2010 in most states), and the proposed cuts go even further than those that states have enacted to date.

So, as the need for services increases, the budgets for programs that help those who are most vulnerable are cut.

This slideshow gives a brief and helpful overview of the situation, and an idea of how long its likely to take to dig out of this.

This website has a lot of useful information, including a look at the ABC's of State Budgets, an intro to the Federal Budget Process and some all round helpful information and definitions of terms that we hear all the time, (like Pay as You Go, Budget Reconciliation, or Earned Income Tax Credit) but may not fully understand unless we are budget geeks.

Bottom line - the news isn't good, and the only way out is to create jobs, as quickly as possible.

cross posted at

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