States Will Face Collective $68.5B Deficit in FY 2004, Partly Due To Health Costs, New Report Says
State budget deficits have increased by a combined $26 billion, or 50%, since last November and have forced a number of states to reduce their Medicaid expenditures, the National Conference of State Legislatures yesterday said in a new report (Calmes, Wall Street Journal, 2/5). The report predicted that states will face an estimated combined $68.5 billion budget deficit for fiscal year 2004 (Goldman, Los Angeles Times, 2/5). According to the report, 36 states have budget deficits this fiscal year, and only Arkansas, New Mexico and Wyoming said that they would not have deficits in FY 2004 (Calmes, Wall Street Journal, 2/5). "State budgets are under siege. ... The faltering national economy, declines in the stock market, contractions in manufacturing and soaring health care costs have combined to undermine the stability of state budgets," the report said (Sullivan/Couloumbis, Philadelphia Inquirer, 2/5). Medicaid and education accounted for the largest share of state expenditures; about 13 states have reduced their Medicaid expenditures this fiscal year, the report found (Wall Street Journal, 2/5). NCSL President and Oklahoma state Sen. Angela Monson (D), who presented the report yesterday at a news conference, said that the federal government must provide states with additional funds to help cover costs for Medicaid and other programs. She said that without additional federal funds, many states would have to raise taxes (Tanner, AP/Nando Times, 2/5).
NPR's "All Things Considered" on Feb. 4 reported on the NCSL report. The segment includes comments from Nick Johnson, director of the State Fiscal Analysis Initiative at the Center on Budget and Policy Priorities, and Monson (Schalch, "All Things Considered," NPR, 2/4). The full segment is available online in RealPlayer.
