State Budgets In Deepening Trouble

The effects of disastrous federal economic policies continue to roll downhill.

At least 25 states face budget shortfalls in fiscal year 2009, according to the Center for Budget and Policy Priorities. For 21 of those states, the combined deficits are expected to total at least $36 billion; the remaining four have yet to come up with an estimate. These states will most likely drastically cut services to meet the requirement that they balance their budgets—an action that will worsen an economic slowdown by laying off employees, cutting purchases and shifting costs to already overburdened residents.

This is where the federal government should step in—as it did belatedly in 2003—by giving direct aid to states so they will not be forced to take actions that will deepen a recession.