State & Local Government

Jobs and State Budget Crises: State by State Fact Sheets

Isaiah J. Poole — Wed, 14 Apr 2010 10:43:15 -0400

The National Priorities Project has created one-page fact sheets using the latest information from the Bureau of Labor Statistics, Recovery.gov and other reputable sources. Data on unemployment, state budget deficits, estimated recovery times for major metropolitan areas, and jobs created by the American Recovery and Reinvestment Act are provided, along with relevant and timely NPP federal budget analysis.

Federal Health Reform Provides Critical Long-Term Help to States

Isaiah J. Poole — Tue, 23 Feb 2010 11:41:10 -0500

Residents and governments of the 50 states and the District of Columbia will receive $849 billion in new federal funding for health coverage over the next decade under proposed federal health reform legislation.

This surge of new federal support includes $460 billion to help families purchase private health insurance coverage and $389 billion for state Medicaid programs. In return, states will be required to provide a modest match for the new federal dollars. Experts estimate the state match will be 3.1 percent of the new federal funds, a fraction of the customary rate.

Separately, under the American Recovery and Reinvestment Act of 2009 and the pending jobs bill, the federal government is financing an immediate and substantial reduction in state Medicaid spending. Experts estimate the combined impact of enacting comprehensive reform, passing the pending jobs bill and completing implementation of the Recovery Act would be a net reduction in state Medicaid spending of $85 billion over the 2009 to 2019 period.

Passage of comprehensive health reform, as well as enactment of immediate relief through higher federal FMAP rates, would provide an enormous financial boost to state governments. These actions will relieve states of significant budgetary pressures while addressing the rising health care needs of American families.

This is What Happens When We Compromise with Conservatives Who are Wrong

Susan Ozawa — Tue, 09 Jun 2009 17:12:49 -0400

Many look at the American Recovery and Reinvestment Act as a victory for Keynesian economics and the progressive majority and as a down payment on fundamental investments we need in vital public services, infrastructure projects and programs that address the needs of the most vulnerable.

There is no doubt that these government expenditures were necessary to compensate for the drastic shrinkage in the economy set in motion by the financial crisis. The movement toward energy conservation and efficiency and toward supporting various underfunded public agencies and social assistance programs marked a significant shift in the political climate in our country after years of energy dependence and regressive economic policies.

However, we lost the battle on allocating the funding necessary to assist distressed states and we are now seeing the consequences. Conservative Democrats made a political trade-off with the right over the share of the American Recovery and Reinvestment Act devoted to tax breaks over vital spending. This trade-off was bad economic policy. Handing over money to the general population in the form of tax cuts is not as efficient an economic stimulus as money spent directly by the government, particularly on programs that employ so many Americans. But now we know the cost in human terms.

In California, plagued by tent cities of those foreclosed on and pushed off the rental market, Governor Arnold Schwarzenegger’s budget cuts paint the portrait of a state without a proper bailout. Seven days will be cut from the public school year; thousands of inmates will be released from prison and others will be packed into county jails; health care will be cut off for more than one million children, including those from low-income families who do not qualify for Medi-Cal, California's Medicaid program; $5.9 million in state funding for four poison call centers will be cut; funding for 220 state parks will be cut; 426,000 seniors will be denied in-home support services; and the state Adult Day Health Care program will be eliminated, denying services to about 36,000 Californians and culling 6,500 employees' jobs at the state's 300 centers. It’s difficult to overstate the human toll of reconciling a $24 billion budget gap.

And these cuts are on top of cuts at the municipal level. In Los Angeles County, 2,250 teachers are expected to lose their jobs. This is in a public school system already struggling with large classroom sizes and significant underfunding.

Those of us advocating for aid to states and municipalities were not using pie-in-the-sky figures of pet projects; we were pushing for the minimum funds required to meet projected shortfalls reported by the states so that the fabric of the country’s vital services could remain intact.

We argued on rational terms. We argued on economic terms. We argued on moral terms and we lost to those who were sure compromise was the only game in town. We lost more than we could afford in our compromise with Bush-era thinking, believing we were still in a Bush-era political climate and not in a crisis that requires triage and backbone, not pawn-brokering where you sell your valuables at a loss when you get into trouble.

These kinds of cuts are just the beginning. According to the Center on Budget and Policy Priorities:

Some 47 states are facing financial stress in their fiscal 2009 or fiscal 2010 budgets.
Budget deficits are already projected in 46 states for the upcoming fiscal year.
Combined budget gaps for the remainder of this fiscal year and state fiscal years 2010 and 2011 are estimated to total $350 billion to $370 billion. The CBPP lists more cuts.

Soon, most of us will all understand the only kind of trickle-down economics that has ever functioned. This is the rule of the regressive distribution of costs, that when times are tough those who are most vulnerable are those who are forced to bare the burden. This will continue to happen unless our elected representatives pay the price for failing to represent our needs.

Now that we see the link between political compromises and human suffering, we must act without equivocation. The ultimatum given to Congress by former Treasury secretary Hank Paulson to secure a $750 billion Wall Street bailout was wrong-headed and uncompromising, done without evidence or moral justification. Congress jumped. We must see that there is no compromise required when states and municipalities are flailing from the bursting of a crisis they did not cause. There is only one place to turn and that's Congress.

Here are three things you can do:

Tell your Congressional representatives they need to answer to you and not Wall Street. If they voted to weaken the Economic Recovery and Reinvestment Act, voted for the passage of the Wall Street bailout and voted against mortgage cramdowns, campaign for a new candidate who will fight for those struggling because of this crisis. See where they stand here.
Support Health Care reform by urging Congress to institute a public plan option, especially the Blue Dog conservative Democrats who are equivocating in their support. See how true health care reform would relieve states here.
Prepare for a fight on more funding for states and those in need from Congress. See the list of those gearing up for the next battle here.

Whatever you do, do not go gentle into that good night.

Fiscal Survey of States

Susan Ozawa — Mon, 23 Feb 2009 14:32:10 -0500

Fiscal 2008 marked a turning point for state finances with a significant increase in states seeing fiscal difficulties, in stark contrast to the preceding several years. As the economy has weakened, so has the state revenue and spending picture. The decline of the housing sector along with a weak manufacturing sector have combined to cause significant declines in revenue for a number of states.

Findings include:

Thirteen states were forced to reduce enacted budgets in fiscal 2008. This is in stark contrast to the three states that had to reduce their enacted budgets in fiscal 2007.
Eighteen states assume negative budget growth for fiscal 2009 governors’ recommended general fund budgets, while four states are estimating negative growth budgets for fiscal 2008.
Medicaid spending from state funds is estimated to increase by 4.4 percent in governors’ recommended budgets for fiscal 2009; more than four times the rate of growth for the overall general fund. This increase in health care spending continues to place pressure on state budgets by exceeding overall spending.
Six states are recommending increases to their fiscal 2009 cash assistance levels under the Temporary Assistance for Needy Families (TANF) program, ranging from 0.1 percent to 30 percent.

Fiscal Conditions in 2008: National League of Cities Research Brief on America’s Cities

Susan Ozawa — Mon, 23 Feb 2009 14:23:43 -0500

Confronted with declining economic conditions driven by downturns in housing, consumer spending, and jobs and income, city finance officers report that the fiscal condition of the nation’s cities has weakened dramatically in 2008.

Among the findings of the National League of Cities’ latest annual survey of city finance officers are:

❋ Two in three city finance officers (64%) report that their cities are less able to meet fiscal needs in 2008 than in the previous year;

❋ Final tallies for 2007 reveal that city revenues, when accounting for inflationary factors, remained flat (growth of 0.1%), while spending increased by 3.0%;

❋ As finance officers look to the close of 2008, they predict that revenues and spending will decline in inflation-adjusted terms, with revenues decreasing by 4.3% and spending decreasing by 1.5%;

❋ Property tax revenues increased by 6.3% in 2007, but are predicted to decline by 3.6% by the close of 2008;

❋ Spending pressures stem from rising costs, such as energy and fuel prices, public safety and infrastructure needs, and employee-related costs for health care, pensions, and wages;

❋ To balance annual budgets and meet ongoing spending needs, many cities are increasing fees and charges for services; and,

❋ Ending balances, or “reserves,” remain at high levels and will provide a buffer against the current downturn.

State Budget Troubles Worsen

Susan Ozawa — Mon, 23 Feb 2009 14:14:59 -0500

At least 39 states faced or are facing shortfalls in their budgets for this and/or next year. Over half the states had already cut spending, used reserves, or raised revenues in order to adopt a balanced budget for the current fiscal year — which started July 1 in most states. Now, their budgets have fallen out of balance again. New gaps have opened up in the budgets of at least 27 states plus the District of Columbia just three months after they struggled to close the largest budget shortfalls seen since the recession of 2001. And these problems are expected to continue into next year.

Fiscal Conditions in 2008

Susan Ozawa — Tue, 04 Nov 2008 07:15:19 -0500