Thursday, June 03, 2010

States don't expect recovery until 2012

Tight budget times in our states may take some time to ease:
The National Governors Association and National Association of State Budget Officers said states expect to still face a combined shortfall of $127 billion in 2010 and 2011. That is on top of a shortfall of roughly $160 billion since 2009.

"Because states lag behind national recovery, they expect 2011 to be as bad as 2010, and states will not begin the path to recovery until 2012," said Raymond Scheppach, executive director of the governors association.

States cut spending by 7 percent, from $658 billion in 2009 to $613 billion this year. The associations said 44 states expect to spend less this year than in 2008.

The cut in spending comes amid plummeting tax revenue. States took in 12 percent less in tax revenue in 2010 than in 2008, forcing 40 states to make mid-year budget cuts.
This article is via Newsalert.

Another article on this same tack is regarding New York state. One of many states in the Union that may be suffering financially in these tough times:
New York state delayed paying $2.5 billion of bills as a short-term way of staying solvent but its cash crunch could get even worse in August and September, Budget Director Robert Megna said on Tuesday.

"Had we not done that, I think we would have been close to broke," Megna told reporters in Albany. This is the third time since December the cash-poor state has withheld funds.

This time, the state's general fund, which counts everything but federal aid and some specific revenues, ran in the red by about $500 million to $600 million, Megna told reporters.

The state was able, however, to borrow from other funds, including the short-term investment fund. About $1.5 billion of the withheld funds must be paid to schools in June. The rest of the total could be paid in July.

"The next big bottleneck is in August and September," Megna said, adding that tax revenues have recently improved slightly, which is a slight bright spot.

Democratic Governor David Paterson's $135 billion budget has not been enacted by the legislature though it was due on April 1.

Megna said that the longer the budget battle grinds on, the less time there is to wring out savings. Paterson and the Democratic-led legislature must close a $9.2 billion deficit.
This article is via Wolf Files.

Hmm, the situation in New York almost resembles what's going on in Illinois. The state still doesn't have a budget by the end of May. Now it takes more work since (as we all know from the budget battled involving the now on trial Ousted governor) that it takes a supermajority to approve a budget. That means that while the Democrats have a majority in Springfield, any approval must also involve the Republican minority.

Tough times!

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