With states in the third year of a fiscal crisis sparked by their steepest revenue decline on record, we’ve updated our analysis of state budget shortfalls for the current (2011) and coming (2012) fiscal years. Here are the highlights:
Recent Census data show that state revenues are stabilizing, as we noted earlier, but they remain far below pre-recession levels — and well below levels needed simply to maintain current public services.
The longer the fiscal crisis continues, the more damaging the potential cuts to public services, since states have already made the less painful cuts. That’s just one of several reasons why most states have rejected a cuts-only strategy in favor of a balanced approach that includes more revenue.