More State Budget Woes
State governments are facing unprecedented budget shortfalls as revenue from capital gains tax and sales tax collections has taken a major hit during the past month. Falling collections come as funding demands for unemployment insurance, Medicaid and other services are likely to increase sharply.
37 states now face a serious budget gap with California's $26 billion leading the way. Other states with budget gaps measured in the billions of dollars include Florida, Nevada, New York, Georgia and Virginia. Click HERE for an interactive state budget map from the New York Times.
For states this means serious spending cuts. The New York Times reports:
In Michigan, to reduce overtime costs, fewer streets will be salted this winter. In Ohio, where the unemployment rate is above 7 percent, the state may need a federal loan for the first time in 26 years to cover unemployment costs. In Nevada, which is almost totally dependent on sales taxes and gambling revenues, a health administrator said the state may be unable to pay claims in a few months.
In California, Mr. Schwarzenegger, a Republican, and state legislators are preparing to do battle over a proposed 1.5-cent sales tax increase, while in New York, Mr. Paterson, a Democrat, has proposed $5.2 billion worth of savings, principally cuts to Medicaid and education.
K-12 education and other important workforce development programs may not be immune to serious cuts:
“Most states have tried to protect K-12 and even higher ed,” said Raymond Scheppach, the executive director of the National Governors Association, “but I think they are both going to be on the block.”
“We’ve cut universities, we’ve cut our infrastructure spending, we’ve prorated schools and asked employees for concessions twice,” said Leslee Fritz, the spokeswoman for the Michigan State Budget Office."
One bright spot for your community may be infrastructure project funding as state's look for ways to stimulate the local economy.
Ohio officials have already passed a stimulus package of $1.5 billion in bonds, to be used largely for public works, advanced and renewable energy projects, and the biomedical industry.
“States don’t have a lot of economic stimulus tools,” said Mr. Pattison of the budget officers’ association, “but they have infrastructure.”
Click HERE for the full article.