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Recession Lies Behind State Budget Problems

January 6, 2011

When it comes to state finances, the big story is still the old story: the recession, and the way it has continued to hurt states’ ability to keep up with rising needs.

Some Right, Some Wrong in “60 Minutes” Story on State Budgets

December 20, 2010

Last night’s CBS “60 Minutes” piece on state budgets made some important points but also — through some big mistakes and omissions — gave a deeply misleading impression of the state budget situation.

Long Road to Recovery for State Revenues

November 30, 2010

Today’s Rockefeller Institute report has some positive news: state tax collections in the third quarter of 2010 were higher than in the third quarter of 2009. However, the overall state budget picture is still bleak, as revenues are 12 percent lower than they were before the recession, adjusted for inflation. The report concludes that “the immediate outlook is for revenue collections significantly below prerecession levels, and growing spending pressures. The overall picture remains: States will face continued, significant budget challenges in fiscal 2011 and beyond.”

Obama’s Business Expensing Proposal Would Prove Expensive for States

November 15, 2010

President Obama has proposed a new tax break for business investment. It’s intended to boost the economy, but it would have the unintended effect of worsening states’ already severe budget problems. That, in turn, would force states to take steps that would undercut the hoped-for economic stimulus.

State Budget Problems Are Hardly Partisan

November 12, 2010

Talk about seeing the world through rose-colored glasses.

Michael Gerson writes in today’s Washington Post, under the headline of “Blue-State Budget Crises,” that “massive state budget shortfalls” are “concentrated” in “predominantly Democratic states.” Well, no. Actually, fiscal distress is as nonpartisan as the recession itself. Republican-dominated states like Arizona, Georgia and South Carolina all faced budget shortfalls for the current fiscal year equal to more than one-quarter of their budgets, as did the “swing” states of Maine, Minnesota and Nevada.

For New Governors, Getting Elected Was the Easy Part

November 3, 2010

Voters in more than half of the states elected new governors yesterday — the first time that’s happened since 1938, according to But one thing hasn’t changed: states still face massive revenue problems resulting from the recession. Next year will be states’ worst budget year ever. So what will the new governors do about it?

State Revenues Turning the Corner?

October 19, 2010

The Rockefeller Institute of Government issued a report today that says state revenues are in a “gradual recovery” after their record decline of recent years. The new data that Rockefeller has collected for the report (on revenues for the April-June quarter) are helpful. But it’s too early to say that state finances have turned the corner.

Big Public-Sector Job Losses Dragging Down Economy

October 8, 2010

As our analysis of today’s jobs report explains, a sharp decline in government jobs in September more than offset the small gain in private-sector jobs. State and local governments, still coping with a massive recession-induced loss of tax revenue and their own balanced-budget requirements, eliminated 83,000 jobs in September, and most of the lost jobs — some 50,000 of them — were in education. Since August 2008, states and localities have shed 416,000 jobs (see chart). These numbers suggest three things:

State Revenues Still Flat-Lining, New Figures Show

September 27, 2010

Data on state tax revenues that the Census Bureau released this morning remind us how devastating the recession has been for states’ ability to fund public services — and how important it is that states are closing their shortfalls in part through new revenues, as my colleague Jon Shure noted Friday.

State Budget Cuts Update

August 5, 2010

States have been scaling back services and trimming their workforces for over two years now in response to sagging revenues resulting from the economic downturn. As our new report shows, these cuts continue to deepen. The cuts that many states have made for the current fiscal year (2011), which began in most states on July 1, go even farther than those in past years. To cite just a few examples, in 2011: