Christian Science Monitor Examines Economic Downturn’s Effect on State Budget Deficits
The Christian Science Monitor on Wednesday examined how "soaring inflation and shrinking tax revenues have combined to place state budgets" across the U.S. "under severe stress." At least 25 states will face deficits in fiscal year 2009 with a combined budget deficit totaling at least $39 billion, according to data compiled by the Center on Budget and Policy Priorities. CBPP's review of state budgets found that among cuts made or being considered by states are reductions in health programs. For example, California Gov. Arnold Schwarzenegger (R) has proposed requiring some families to pay more for SCHIP coverage.
A Rockefeller Institute of Government report released on March 31 found that combined state tax revenues decreased by 4.3% in the fourth quarter of FY 2007, after accounting for inflation. According to the Monitor, "jumps in fuel and health care and pension costs [were] big contributors." Robert Ward, deputy director of the institute, in the report said, "The result may be a squeeze on states' ability to fund services." Ward said, "States are experiencing a classic nutcracker effect: costs are rising sharply just as revenues falter" (Grier, Christian Science Monitor, 4/2).
