group of state budget officers released a study June 26 showing
that states have cut more from their budgets to survive this fiscal
year than they have in a quarter-century.
study also said a record number of governors want to shrink their
budgets in order to survive next year.
Scheppach, executive director of the National Governors Association,
which released the report with the National Association of State
Budget Officers, said in a statement the “news is pretty bad”
– and it’s going to get a little worse.
report found states cut $14.5 billion to cover shortfalls for
the fiscal year that ends June 30, the largest correction in the
27 years the group has tracked state finances. In addition, a
record high number of 19 states began next year’s budget debate
proposing to shrink spending.
said one consequence of the revenue shrinkage is that lawmakers
are cutting nearly every area of state government, including education,
Medicaid, state police, prisons and aid to towns and cities.
stem fiscal bleeding and protect state programs, many states are
also turning to tax and fee increases, with 29 governors proposing
$17.5 billion in higher taxes or fees next year, the largest proposed
increase since 1979.
report doesn’t detail how much in new taxes and fees actually
were passed or remain under consideration, as many states have
finished their budget planning and legislative work, The Associated
new report also warned that the use of reserves, or “rainy day”
funds, had left the states significantly less able to cushion
any additional economic blows.
balances overall are currently at $6.4 billion, or 1.3 percent
of expenditures. In 2000, at the peak of the economic boom, reserves
were at $48.8 billion, or 10.4 percent of expenditures.