Senior Vice President for State Fiscal Policy
The debt limit deal inevitably will lead to large federal cuts in programs that directly benefit families and communities, adding to the deep and widespread cuts that states have made in their programs — everything from preschool to services for the elderly.
The recession triggered the largest decline in state revenues on record, opening up more than $430 billion in budget shortfalls over the past four years (see graph). States have balanced their budgets mostly by cutting services and shedding employees: 34 states have cut K-12 education, 43 have cut college funding, 29 have cut services for the elderly, and 31 have cut health care.
To cite just a couple of examples, Texas is eliminating state funding this year for pre-K programs that serve around 100,000 mostly at-risk children, and Arizona is eliminating Medicaid coverage for 100,000 poor adults who otherwise would qualify.
States and localities have also shrunk their workforces by 577,000 jobs since 2008 and continue to shed tens of thousands of jobs per month.
Now, the federal government will pile on by making deep cuts. We do not yet know exactly how Congress will meet the savings targets in the new debt limit deal, but we know that: