State and Local Budgets Feel the Crunch
This week Neal Pierce's article from Citiwire.net addressed the deepening budget problems state and local governments are facing the in wake of the financial crisis. Pierce asserts that:
"The Wall Street fiscal crisis effectively shut the state-local government sector out of borrowing — either for long-term bonds, or of more immediate gravity, bridge loans to keep them afloat awaiting sales tax and April income tax receipts."
He adds, however, that:
"...the stage for a “perfect fiscal storm” was already set by the seriously weakened fiscal condition of so many state and local governments. On top of the stunning $43 billion in prospective deficits that 29 states had to cover with spending cuts or tax hikes, taxes for the fiscal year starting July 1, at least 15 of these states have already seen serious new budget gaps emerge."
The articles goes to address the specter of public pension liability and raises this question about intergovernmental cooperation as a potential solution:
"Should Congress approve of billions of dollars in revenue sharing for states and localities hard hit by the decline in tax revenues caused by the foreclosures federal inattention triggered, and falling property values?"
Click to access the full article: Feds, States, Cities: In One Fiscal Boat.
Citiwire.net is a new service from the Citistates Group that offers weekly articles on metropolitan policy and planning. Each week features an article from noted columnist and Citistates Group co-founder Neal Pierce and one from another of the Citistates group associates.