Report: Nearly Half of States Face Shortfalls Amid Downturn
As the banks go national and Wall Street goes loco, states are increasingly feeling the pain of the economic turmoil.
Twenty-one states and the District of Columbia now face budget shortfalls totaling $8.9 billion this fiscal year, according to an analysis released this month by the Center on Budget and Policy Priorities, a liberal policy watchdog.
The financial crisis has been particularly tough on states, for at least two reasons.
First, consumers are spending less, and that means sales-tax revenues are falling at the same time that demand for social services like unemployment benefits, food aid and Medicaid is rising.
Second, unlike the federal government, states (generally) are required by law to balance their annual budgets.
And here’s a hint: It’s not the wealthy folks who usually feel the pain of the squeeze.
This fiscal year, 22 states have already made or proposed cuts to programs benefiting some of their most vulnerable residents, CBPP found. Some examples, according to another CBPP report:
- 14 states have cut programs providing health-care services to low-income residents. Rhode Island, for example, eliminated care for an estimated 1,000 low-income parents.
- 11 states have cut medical care for the elderly and disabled. Ohio, for example, has closed two mental health facilities.
- 17 states have cut funding to public colleges and universities. Community and technical college students in Kentucky, for example, have seen average tuition hikes of 5.2 percent as a result of education cuts there.
- 13 states have cut funding to public elementary, middle and high schools. Aid to local school districts in Florida, for example, has been cut by roughly $130 per student.
Unlike some banks, of course, the folks affected by these cuts are not too big to fail.