While economists debate whether we are in a recession, state governments are feeling a big time bind. Here are some highlights from a
Stateline.org article:
- In California, teachers' unions
estimate that nearly 14,000 pink slips already have been sent out and
more are in the offing as the state grapples with a $16 billion
projected deficit for 2009.
- Some 3,000 state employees in New Jersey
and 1,200 in Rhode Island could find themselves in the unemployment
line under proposals to stop the red ink flowing in those states.
- Some 7,000 mentally ill and elderly in Maine could be dropped
from Medicaid, the state-federal health program that serves 59 million
needy.
- Medicaid recipients in Vermont may face a higher co-pay.
- Arizona is considering eliminating child-care subsidies for 3,200 children in low-income families.
- College
students in Iowa and Pennsylvania will have to find student loans
through private banks as the credit crunch led those two states'
lending agencies to suspend programs.
- Researchers at the Urban Institute
estimated in February that a 1 percent hike in the unemployment rate
translates into 2.5 million people nationally losing their
employer-sponsored health insurance, Medicaid rolls increasing by 1
million and ultimately a 3 percent to 4 percent decline in state
revenues.
- Today,
22 states have a collective budget shortfall of at least $37 billion,
which is about the same size deficit they had at the start of the 2001
recession, said Iris J. Lav, deputy director of the Center on Budget and Policy Priorities. If
the current downturn follows the path of previous recessions, 35 to 40
states could face budget cuts in 2009, the National Governors
Association recently estimated.
It's not all bad. Stateline points out that oil, gas, ethanol and coal revenues have helped Alaska, Montana, New Mexico, Wyoming, Iowa,
Nebraska and South Dakota.
Critics do not weep for state governments. The Stateline story points out:
"States didn't do a good job preparing for the inevitable,"
said Pete Sepp, a spokesman for the National Taxpayers Union, which
advocates lower taxes. "Sure the inevitable happened sooner than anyone
thought," Sepp said, but he criticized states for going "on such a
spending spree." State spending grew a robust 9.3 percent in fiscal
2007, far above the 30-year average of 6.4 percent, according to
figures from the National Association of State Budget Officers.
"In the last three or four years, states saw strong revenues and never had to make the tough choices," Williams of ALEC said.
It is interesting to look at
the texts [PDF] of various governors' state-of-the-state addresses. A few of them used dire language. Many mentioned the words "green" and "environment."
