Today’s Wall Street Journal editorial (“Virginia Is for Surpluses”) trumpets Virginia’s $400 million surplus for fiscal year 2010 and praises Governor McDonnell for closing the state’s large budget shortfall without raising revenues. But both parts of this argument have serious flaws.
BEYOND THE NUMBERS
A new Congressional Budget Office analysis finds that the 2009 Recovery Act is
continuing to save jobs and protect the economy from what would have been a much deeper recession. As of June, the Recovery Act had:
The day President Obama signed an extension of assistance to states to preserve jobs in education and health care — August 10 — Mississippi Governor Haley Barbour said that accepting the money would make his state worse off, since Mississippi would have to take up to $75 million in state funds away from law enforcement, mental health, and other needs to qualify for the federal funds.
No state has been hurt more by the recession than Michigan, where unemployment tops 13 percent and home values have plummeted in many areas. So a few days ago, when many communities across the state voted on ballot questions to raise money for local services, the result could only be a disaster for supporters of higher taxes, right?
To add to my post this morning, one reason why it’s so urgent for the House to act quickly on state fiscal assistance is to stem the loss of public-sector jobs. In July alone, 48,000 state and local workers lost their jobs, according to Friday’s Labor Department report, including 30,000 men and women in the education field. Some 316,000 public-sector jobs have disappeared over the past two years.
The House of Representatives is expected to vote tomorrow on a measure the Senate approved last week to extend badly needed education and health care assistance for states from last year’s Recovery Act. Here are the amounts each state would lose if the House fails to approve the funding.
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:
A new survey of leading economists about the state budget crisis adds ammunition to the case for more federal fiscal relief. Lawmakers should take a close look and reconsider their failure to provide additional relief to date.
“It could’ve been a lot worse” may not be a winner as a political message, but it’s the right response when people complain that the TARP financial stabilization bill and the 2009 Recovery Act didn’t work. This chart, based on new data on gross domestic product (GDP) released this morning, shows the turnaround in the economy since Congress enacted these measures.
As states tally up spending and revenues for fiscal year 2010, which ended June 30 in most states, some (such as Virginia and Connecticut) are finding that they ended their year with their budgets in the black. Here’s what those modest “surpluses” mean — and what they don’t.