Double Whammy: State Budget Shortfalls Compound Federal Cuts

March 4, 2011 | By Liza Casabona | Post a Comment

It’s no secret that states face budget crises that are potentially more damaging for local entities than discretionary spending cuts at the federal level. States claim that they were the first into the recession, and many are still climbing out of the hole they fell into.

At the very least, federal and state budget problems are on a collision course that will squeeze already tight funding pools. At worst, we’re looking at a crippling loss of funding for some critical services and programs. A lot of the impact is going to come down to how states and their governors choose to address budget imbalances.

A late February report from the Center on Budget and Policy Priorities [http://www.cbpp.org/cms/index.cfm?fa=view&id=3389] found that 33 out of 42 states who had submitted budge proposals for fiscal year 2012 planned significant cuts to public services.

At least 17 states plan to target K-12 education spending, 22 propose cutting healthcare coverage, 17 say they will cut higher education and 13 propose layoffs or cuts to public workers’ pay and benefits.

While states need to get their fiscal houses in order, the report found that many governors slashed spending without considering alternatives like raising revenues or using rainy day funds, even when those options were available.

States are faced with some very difficult decisions, but the same questions apply to them as are being debated on the national stage, just how much is too much when it comes to spending cuts? And which services are “critical?”

Subscribers to Thompson’s Local/State Funding Report can read more about state budget crises and the Center on Budget and Policy Priorities’ report in the March 14 issue.

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