6. State Budgets
It’s no secret that for the past few years, state leaders have struggled to balance their budgets amid crashing revenues and soaring expenses.
“This has been a really difficult period of time for states. You saw revenue decline dramatically. The economy in a lot of states was impacted,” said Scott Pattison, executive director of the National Association of State Budget Officers.
In 2011, states focused largely on cutting expenses rather than increasing revenues as a way to end the year in the black. The National Association of State Budget Officers’ Spring 2011 Fiscal Survey of the States shows that proposed spending in the 2012 fiscal year is $18 billion less than spending in the 2008 fiscal year. States made considerable cuts in spending across a spectrum of programs during the most recent fiscal year.
“The highest percentage cuts you saw in general government—those areas that are administrative or those areas that include things like state parks—then you saw some significant cuts in terms of dollar amounts in areas like education, higher education in particular,” said Pattison.
According to the Center on Budget and Policy Priorities, at least 46 states plus the District of Columbia have made spending cuts since 2008 representing every major service area, including health care (31 states), services to the elderly and disabled (29 states and the District of Columbia), K-12 education (33 states and the District of Columbia) and higher education (43 states).
Although state revenues started rebounding slightly in 2011, revenue still remained below pre-recession levels. That will continue to put states in a pinch, especially because the demand for services—like unemployment benefits, food assistance and welfare benefits—continues to climb amid high jobless rates and increasing poverty.
The depth of the recent recession has left states so low on revenue that even historically “sacred” areas of state budgets – like health care and education – saw significant cuts despite Recovery Act funds that helped cushion those areas from even greater cuts. However, those federal funds have largely run out and the improved revenue picture may not be enough to offset those losses.
“There’s no question that even though we’ve seen some revenue growth in the first part of this calendar year and we hope that continues, we’re not necessarily seeing enough revenue growth to make up for what’s been previously cut,” said Pattison.