Even If State Economies Recover, Health And Medicaid Costs Will Be A Burden

Rising health care and Medicaid costs coupled with flat revenue are parts of a bevy of economic problems states face in the coming years even if the economy recovers, according to a new report from the State Budget Crisis Task Force -- led in part by a former Federal Reserve chairman.

The New York Times: Gloomy Forecast For States, Even If Economy Rebounds
The fiscal crisis for states will persist long after the economy rebounds as they confront rising health care costs, underfunded pensions, ignored infrastructure needs, eroding revenues and expected federal budget cuts, according to a report issued here Tuesday by a task force of respected budget experts (Williams Walsh and Cooper, 7/17).

The Wall Street Journal: Report Details Threats To States' Fiscal Health
Rising Medicaid costs and pension expenses for public employees threaten states' abilities to provide basic government services as they continue struggling with unreliable tax bases in a weak economy, according to a task-force report. The report by the State Budget Crisis Task Force, which is co-chaired by Paul Volcker, a former Federal Reserve chairman, and Richard Ravitch, a one-time lieutenant governor of New York, says states' growing gaps between entitlement spending and available revenue are becoming unsustainable (Corkery, 7/17).

The Associated Press/Wall Street Journal: Report: U.S. States' Financial Woes Eroding Services
U.S. states face long-term budget burdens that are already limiting their ability to pay for basic services such as law enforcement, local schools and transportation, a report released Tuesday said. Aging populations and rising health care costs are inflating Medicaid and pension expenses. At the same time, revenue from sales and gas taxes is shrinking. And grants from the federal government, which provide about a third of state revenue, are likely to shrink, the report said (7/17).

Reuters: Volcker, Ravitch Warn State Budgets Under Long-Term Threat
States' current spending, taxation and budget practices cannot be sustained, and the public must take action to change fiscal problems that go well beyond the 2007-09 economic recession, an independent bipartisan committee said on Tuesday. … The State Budget Crisis Task Force, headed by Volcker and former New York Lieutenant Governor Richard Ravitch, studied six key U.S. states and found that rising health care and pension costs, along with tax volatility and federal budget cuts, threaten state budget stability (Lambert, 7/17).