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You are here: Home / State Spending Recession

State Spending Recession

by @heymistermix.com|  June 1, 20109:22 am| 31 Comments

This post is in: hoocoodanode

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In “Bonddad” Stewart’s roundup of the first quarter GDP numbers at 538, this chart stood out:

Amidst some decent news about economic growth, state spending is way down. Even though stimulus is evil socialism, it looks like another round targeting states would have been a good idea, as some DFHs have been saying all along.

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31Comments

  1. 1.

    PeakVT

    June 1, 2010 at 9:29 am

    You have the PCEC96 graph there, not the SLCEC96.

    Here’s a link to Fred2, which is the source of the graphs.

    ETA: Fixed before even commented.

  2. 2.

    geg6

    June 1, 2010 at 9:29 am

    Shriek! Deficit! Entitlements! Lazy people should starve! Fuck those highly paid elitist teachers! Shriek!

    And for a little on how this impacts people in the real world, as opposed to the Village, the PA Higher Education Assistance Agency (PHEAA) has announced that the maximum PA State Grant for higher education will be $1000 less than last year due to lack of funding. So those deadbeat poor and working class kids can go fuck themselves for being losers for not being born to wealthy, god fearing, productive members of society.

  3. 3.

    Brian J

    June 1, 2010 at 9:30 am

    I don’t know if this is possible any place besides my head, but why can’t the governors of states that want the stimulus money so badly be forced to submit long term plans to cut spending? If there’s a lot of inefficient spending in New York or California, is it that hard for the state to say that they are going to eliminate this or that over the course of ten years as a condition to getting more money?

    Something like this appears to be part of the plan circulated by Brad DeLong about a year ago. He also proposed allowing them to run their own fiscal expansions.

  4. 4.

    cleek

    June 1, 2010 at 9:30 am

    electing 70 Dem Senators would’ve been an even better idea.

  5. 5.

    Brian J

    June 1, 2010 at 9:32 am

    @geg6:

    How much is the total amount of funding devoted to what you are talking about? Probably far less than $1 billion, right?

  6. 6.

    jeffreyw

    June 1, 2010 at 9:34 am

    Perfect timing, first day of the month is my pension payday. Illinois came through again.

  7. 7.

    Morbo

    June 1, 2010 at 9:37 am

    Very unserious.

  8. 8.

    mr. whipple

    June 1, 2010 at 9:38 am

    Yes, everyone knows more money would be awesome. But no one has a plan for getting the votes necessary.

  9. 9.

    geg6

    June 1, 2010 at 9:51 am

    @Brian J:

    Definitely not ever funded in the billions.

    In 2009-10, the appropriation was $407,413,000; in 2010-11, it is $403,632,000. That’s a 1% decrease, but it hits people really hard, especially with the cut in funding for state colleges and universities, which means a tuition increase higher than what was expected. And for some perspective on this, my university is what is called here “state-related.” It means we are a public university, but not a part of the state-owned university system. Since I have been here (starting in 1998), we have gone from 14% of our funding coming from the state to less than 6%.

    So poor and working class students will pay more to get an education because the state provides less funding for the institutions and, at the same time, will get less help from the state to help cover the tuition increase the funding cut requires.

    Catch-22 for those kids.

  10. 10.

    RSA

    June 1, 2010 at 9:55 am

    As geg6’s comments suggest, I think it’s important to see where the cuts are coming from.

    Amidst some decent news about economic growth, state spending is way down.

    The range on the y-axis of the plot shows about a 1.5% decrease from the peak. That doesn’t sound like a lot, but it probably makes a big difference depending on where the cuts are.

  11. 11.

    Brian J

    June 1, 2010 at 9:56 am

    @geg6:

    Well, yes, but my point was that it’s a big sum for us but a smaller sum for the state government and a pittance for the federal government. The fact that we are having so many problems funding higher education while handing out subsidies to corporations is appalling on a number of levels.

  12. 12.

    El Cid

    June 1, 2010 at 9:59 am

    We have no choice but to make poor and working people suffer in order to pay off treasury bonds etc. with higher interest rates, because our #1 priority has to be the battle with inflation, which there’s none of currently and there’s none predicted and we seem to be still risking deflation, because only GOLD will let us survive and also SHUT UP.

  13. 13.

    Brent

    June 1, 2010 at 10:04 am

    Let the republican goveners and congress-vermin publically request federal aid before it is even considered. I’m sick of how little positive press was given to the first stimulus, including sizable tax cuts for the middle class, yet became a huge focus of misinformation for wingers. I’m sick of those same republicans who derided and castigated the stimulus later staging photo ops with oversized checks boasting of recovery funds to their districts.

    Let them cry for federal aid like govener Jindal who has suddenly discovered a role for federal intervention. No more political fodder for the right to whine about the deficit and our grandchildren’s future. Let them come hats in hand this time.

  14. 14.

    thomas

    June 1, 2010 at 10:08 am

    Keynesian econ is so 1930’s

  15. 15.

    Jerry 101

    June 1, 2010 at 10:12 am

    I’m an auditor working for a cpa firm, and I specialize in audits of state and local governments, so I follow the news on government spending pretty closely here in Illinois.

    It’s bad right now. The cuts are coming in deep and hard. The State is flat broke, the deficit is deeper than one can comprehend, and the Legislature lacks the political will to raise taxes.

    It’s not like we’re California – the Lege could raise the income tax by a point or 2 without any trouble. All Democratic control, no need for supermajority votes. The Governor (Quinn) came out in favor of an increase pretty much from the day he was sworn in. The Speaker of the Illinois House (and the State Party Boss – Mike Madigan) refused to play along, even though he had (what I thought) was a perfect opportunity – he could have let the raise go through, then had his daughter primary Quinn (the odds were, prior to the actual start of the primary season- which ended in February – that Lisa Madigan was going to run for Governor and trounce any and all opposition). Quinn would have been happy to sign the income tax hike, then he would have been sacrificed and could have gone back to his old job as a rabble rouser and consumer advocate. Democrats running for re-election could have put all the blame on Quinn for the tax hike, and candidates could have made all sorts of promises to reverse the tax hike – much of the deficit situation is temporary – years of underfunding state pensions under George Ryan and Rod Blagojevich has left us in a huge hole. Fill that hole, and much of the tax hike could have been reversed. Couple that with a dream of Illinois progressives – a constitutional amendment to allow a graduated income tax, and damage control could have been accomplished pretty easy.

    Instead, Mike Madigan refused to play ball, and we have Quinn running a very stupid re-election campaign against a Republican Tea-bagger type who won’t propose any legitimate policies to balance the State budget, except to “cut waste and fraud” and “reduce spending” – the hole is to deep and the State has cut so much (State government spending, per capita, in Illinois is amongst the lowest in the nation. State employees per capita is amongst the very lowest in the nation. Cutting “waste and fraud” ain’t gonna work).

    So, the State is slashing remittances to local governments, especially school districts. Which are funded by State Government monies and local property taxes (and, with the bad economy, property tax receipts are hurtin’). So the State is slashing employment, school districts are laying off huge numbers of teachers (In Chicago, they’re talking about class sizes as high as THIRTY FIVE). State Universities have effectively been privatized.

    It’s bad out there. The ARRA money staved off a lot off the pain, but it’s a-comin’ now. The double-dip recession’s a-coming.

  16. 16.

    jwb

    June 1, 2010 at 10:14 am

    Unless the federal government steps up or WWIII breaks out, 2011 is going to be a horrible economic year.

  17. 17.

    El Cid

    June 1, 2010 at 10:15 am

    @thomas: There are no lessons to be learned from the 1930s, because it was a long time ago, and the best times ever were under the McKinley administration and we should be like that, only more so.

  18. 18.

    jwb

    June 1, 2010 at 10:17 am

    @El Cid: Totally. Rock on, dude.

  19. 19.

    Nancy

    June 1, 2010 at 10:23 am

    Senator Harkin is working to get $23 billion to the states to keep teachers employed. His plan has been to attach this as an amendment to the supplemental spending bill. It passed the House in December.

  20. 20.

    Thunderlizard

    June 1, 2010 at 10:29 am

    Look at the Y-axis. The graph scales from 1520 to 1550, or about 2%.

    While I agree (on the authority of Galbraith and Krugman, along with my rudimentary understanding of macroeconomics) that government spending should be high when unemployment is, and that this trend is a Bad News Bear, it’s not nearly as disasterous as the curve makes it appear.

  21. 21.

    gypsy howell

    June 1, 2010 at 10:42 am

    Did any of you see PBS’s piece on the CCC of the 1930s last night? It was so inspiring, and at the same time so totally depressing, to see what a strong leader and willing nation can do in the midst of a catastrophe, back when we were a can-do nation instead of the no-can-do nation we are today.

    And to everyone who says Obama can’t do anything about this godawful mess we’re in on so many fronts, go take a look at the show and see what FDR did, in a climate facing the exact same screeching and wailing from the rightwing that we hear today about sosha-lizm and facizm and comma-nizm and deficits. But he got it done.

    He put 3 million young men of all races to work in 6 months, basically creating the infrastructure we’re still relying on today, and at the same time pulling those millions and many more out of a grinding depression.

    Goddammit it, made me so mad that we can’t seem to do that today. We are a nation of complete losers, and I’m sorry to say we deserve every bit of what’s happening to us, from the financial meltdown, to the never-ending wars that eat up a trillion dollars, to lack of health care, to crumbling infrastructure and a poisoned Gulf.

    Our congress sucks, our president sucks, and we suck.

  22. 22.

    thomas

    June 1, 2010 at 10:48 am

    @El Cid:
    Thank you El Cid. I understand much better now.

  23. 23.

    Roger Moore

    June 1, 2010 at 10:51 am

    @Brian J:

    If there’s a lot of inefficient spending in New York or California, is it that hard for the state to say that they are going to eliminate this or that over the course of ten years as a condition to getting more money?

    In California, it would be virtually impossible. A key part of California’s problem is that our elected officials hands are tied by Constitutional amendments that mandate specific spending, so the amount of the state budget that they actually have some control over is small. We can’t have a fiscally sane government without a major revision to our State Constitution.

  24. 24.

    Brian J

    June 1, 2010 at 10:55 am

    @Jerry 101:

    I like to imagine that if I was ever in a position like Quinn, I’d be more than happy to take one for the team.

    @gypsy howell:

    I agree. There’s a certain time lag when it comes to these things, or so they say, but we said the same thing last year. Here we are, a year later, and while things might be getting better, they certainly aren’t getting better fast enough. So even if we can’t speed things up, we should be doing more, because it’s not like the economy will be back up to speed in three years anyway.

  25. 25.

    mclaren

    June 1, 2010 at 11:23 am

    State spending has fallen off a cliff throughout all 50 states, and it’s getting worse as time passes. At least five states are already disintegrating and falling into economic and social black holes — Michigan, Missouri, Nevada, Louisiana, California — and the rest are rapidly losing ground.

    With Michigan and Nevada the now-eternal sky-high gasoline prices have destroyed their basic economies; in Michigan, with the end of the Happy Motoring lifestyle the auto industry is going away, while in Nevada the end of cheap gas means no more tourists taking a spin to the casinos on the weekends. Louisiana has gotten clobbered by Katrina and now the oil gusher destroying their coastline and fisheries adds the final death blow. Missouri disintegrated with the collapse of the rust belt and California has long-term structural problems due to outsourcing and its freeway car culture.

    Someone above naively asked:

    …Why can’t the governors of states that want the stimulus money so badly be forced to submit long term plans to cut spending?

    Because of the problems that are destroying the economies of the individual states are structural crises caused by the layout of American society and can’t be fixed by individual governors. California, for example, is dying because it’s based on a freeway car culture designed when oil cost a dollar per barrel. Oil is forecast to rise to and stay at 175 dollars per barrel. A governor has no effect on that.

    California also depends on slave labor illegal immigrants to pick its lettuce in the hot hot sun for 50 cents an hour and that’s just as unsustainable as the freeway car culture. At the same time, California has set up rich pensions for its police and firefighters and prison guards and those contracts are set in stone. A governor can’t break them now, and those gold-plated pensions will be destroying and barnkupting California for the next fifty years — the time to have done something about those gilt-edged pensions was 30 years ago. Now it’s too late. Even if the pension plans are revised, California is already contractually obliged to pay out a river of gold for the next 30 or 40 years.

    California is also running out of water and that’s due to global warming. As the temperature skyrockets (119 F in Woodland Hills CA on 23 July 2006), the drought worsens, and once again the governor has no control over that.

    Louisiana will be spending itself into bankruptcy for the next century trying to repair the damage from that BP oil gusher, if it can be repaired: Decades after the Exxon Valdez spill, fishermen still can’t fish in that are of the Alaska coastline. Michigan is disintegrating into a Mad Max wasteland and the mayor of Detroit is now talking about bulldozing large parts of the city because they don’t have enough revenue to police the crumbling cityscape that’s left. St. Louis continues to burn every year as arsonists go berserk on “hell night” and the city’s blasted moonscape gets worse and worse. It’s a death spiral like Baltimore, where the decaying third world urban hellscapes drive out residents, the tax base plummets, less services become available including fire and police, the urban landscape crumbles even more and gets even worse, which drives out more residents…rinse, wash, repeat.

    Governors can’t fix these kinds of death spirals by cutting spending. The problem right now in most states in the U.S. is that essential services are getting cut to the point where residents flee, which in turns destroys the tax base and force even more cuts in essential services.

    The fundamental problem is that America has decided to run multiple unsustainability marathons simultaneously in an apparent effort to see how far we can push things until our society and our economy collapse completely. On the one hand we’ve got a national freeway car culture with countless laws making high-mileage vehicles illegal (for instance, in most cities and most states, large Chinese mopeds go too fast to be certified as mopeds and can’t be imported legally) and banning high-efficiency home construction (like straw bale construction) with the result that Americans continue to drive insanely wasteful gas-guzzling SUVs while mass transit and light rail has gotten blocked at every turn.

    At the same time, Americans continue to stupidly support multiple foreign wars in third world hell-holes, which we’re losing, at the same time we eagerly applaud spending ourselves into bankruptcy to build Buck Rogers hi-tech weapons that don’t work (like the failed missile defense system, or the ridiculous airborne laser beam weapons).

    At the same time, we’ve passed non-reform health care “reform” that has no cost controls, yet forces Americans to buy health insurance from greedy corrupt medical-device-insurer-hospital-doctor cartels who jack up the price to infinity, without limit. Meanwhile, American businesses outsource all high-wage high-skilled jobs to Chinese and Indian PhDs, turning America into a nation of dog groomers and hairdressers and window washers.

    At the same time, the cost of a college education continues to spiral out of control, now up beyond a quarter million dollars for a top 50 college, and still climbing without limit. And to top it all off we eliminated usury laws back in 1982 and never reinstated ’em, so now the banks are going berserk charging 35% interest rates and hitting consumers with $50 overdraft fees until people are going broke left and right.

    You put this all together, and it’s no wonder all the states are falling apart. All the high-wage jobs have been outsourced, all the college students and recent college graduates are crushed under a burden of debt they’ll never pay off for the rest of their lives. Driving a car now costs more than the average person can afford, and it’s getting more expensive, not less.

    One out of every four homeowners now owes more on their houses than the house is worth, and as the economy continues its free fall, more and more people are losing their homes to foreclosure, or because they can’t pay the property taxes anymore. As the tax base declines, the cities and towns have less money to spend on basic services, which in turns causes worse urban decay, which in turn makes more people leave, which in turn decreases the tax base even further.

    So many unsustainable trends have now combined that we’re looking at a perfect storm. The future cost-cutting plans for most states in the U.S. are those that Detroit is now facing: bulldoze houses and shut down fire and police and ambulance services because the communities can no longer afford to pay for them.

    States are now being crushed by unfunded mandates like the HCR “reform” bill’s mandate that 15 million chronically ill people get added to the states’ medicaid rolls even though medicaid expenses are already bankrupting the states and the states are slashing medicaid reimbursements to the point where no doctor will accept medicaid because it pays too little. Yet the HCR “reform” funding for those 15 million chronically ill uninsurable people doesn’t kick in for another 4 years.

    States are getting bankrupted by the flood of newly middle-class homeless who’ve signed up for food stamps. Explain how you cut your budget when armies of people who’ve just lost their houses and their jobx and are over age 45 and will never be able to find another job again suddenly start applying for welfare and food stamps, as it happening now?

    Explain how states cut their budgets when the revenue from the gasoline tax plummets because people can’t afford to drive their cars with the sky-high cost of gasoline. Explain how states can their budgets when unemployment skyrockets and causes a huge spike in crime, requiring far more overtime for police. Explain how states cut their budgets when the war on drugs clogs their prisons with millions of people swept up in crazy SWAT raids that break down the doors of private homes and drag people away to prison for having a couple of joints in their bedroom drawer.

  26. 26.

    gypsy howell

    June 1, 2010 at 12:36 pm

    like I said above, mclaren — we deserve every fucking bit of the misery we’ve brought on ourselves by allowing 30+ years of right wing conservative Republican rule, along with their feckless, spineless co-conspirators, the Democrats we’ve elected from time to time.

    And it looks like we’re going to get it.

  27. 27.

    Fern

    June 1, 2010 at 12:49 pm

    @Thunderlizard: Indeed – it is a highly misleading graph. I make it to be a drop of 1.6%. Does 1.6% = way down?

  28. 28.

    Fern

    June 1, 2010 at 12:52 pm

    @mclaren:

    With Michigan and Nevada the now-eternal sky-high gasoline prices have destroyed their basic economies

    I don’t get this thing about sky-high gas prices. Americans have among the lowest gas prices in the world.

  29. 29.

    Brian J

    June 1, 2010 at 1:22 pm

    @mclaren:

    I was basing that comment off of the claim that we shouldn’t bail out the states because of the long term spending problems they have. It’s well acknowledged that the root of the temporary problem is a cyclical downturn in the economy that was beyond each state’s control, but even when that is considered, some feel that the long term problems they have mean they shouldn’t be helped right now.

  30. 30.

    Brachiator

    June 1, 2010 at 1:39 pm

    Amidst some decent news about economic growth, state spending is way down. Even though stimulus is evil socialism, it looks like another round targeting states would have been a good idea, as some DFHs have been saying all along.

    It ain’t necessarily so. Bailing out states, in some cases, is more like bailing out bad banks (one exception is supplements to state unemployment insurance programs). It props up failure, but does not necessarily do anything to stimulate the economy, which is supposedly the ultimate goal of various stimulus proposals.

    I’m not even sure that GDP figures give the best progress report on the state of the economy. GDP figures tend to be used because they allow economists to compare countries (with some adjustments). But far more telling would be unemployment and wage figures. If unemployment persists and wage growth is stagnant, then rising (or falling) GDP numbers don’t tell you very much.

    And where the DFHs continue to stumble is in their persistently wrongheaded belief that it doesn’t matter where money comes from — government or economic productivity — as long as people have money to spend.

    @mclaren:

    With Michigan and Nevada the now-eternal sky-high gasoline prices have destroyed their basic economies; in Michigan, with the end of the Happy Motoring lifestyle the auto industry is going away, while in Nevada the end of cheap gas means no more tourists taking a spin to the casinos on the weekends.

    Michigan is dying because the core automobile and related industries that the state depended on are dying and people don’t have jobs. Nevada is being hit for a related reason — people without jobs don’t have the extra disposable income to throw away in Vegas. Competition comes into play as well, since Californians with spare cash have no problem driving to Indian casinos (and Vegas always depended on California tourism dollars). And you can more easily just gamble for the day without getting a hotel room, saving more money.

    California also depends on slave labor illegal immigrants to pick its lettuce in the hot hot sun for 50 cents an hour and that’s just as unsustainable as the freeway car culture.

    This oversimplifies a complex issue. Many illegal immigrants had moved from agriculture to construction, where they are relatively well paid. And illegal immigrants are deeply embedded into all facets of the California economy, from hotel and janitorial services to the food industry.

    At the same time, California has set up rich pensions for its police and firefighters and prison guards and those contracts are set in stone.

    It ain’t just cops and firefighters. It’s an entire range of city, county, and state workers, including teachers.

    California is also running out of water and that’s due to global warming. As the temperature skyrockets (119 F in Woodland Hills CA on 23 July 2006), the drought worsens, and once again the governor has no control over that.

    Another oversimplification. California, especially Southern California, doesn’t have much in the way of its own water, depending on other areas and states for its supply. Global warming in the long term may be an issue, but there are other issues at play, including the fact that Southern California is sustained by technology and human will fighting against nature.

    States are now being crushed by unfunded mandates like the HCR “reform” bill’s mandate that 15 million chronically ill people get added to the states’ medicaid rolls even though medicaid expenses are already bankrupting the states and the states are slashing medicaid reimbursements to the point where no doctor will accept medicaid because it pays too little.

    You’re making things up here. Health Care reform changes are minimal for 2010 and are largely irrelevant to current state budget problems.

  31. 31.

    mclaren

    June 1, 2010 at 9:09 pm

    @Brachiator:

    You’re making things up here.

    Not so. Let’s take a look at the evidence:

    In a worst-case scenario, Indiana’s budget could have to absorb as much as $3.6 billion in new costs over the next decade if the 1.5 million Hoosiers made eligible for Medicaid by the new health care law enroll in the program, according to a new analysis by Gov. Mitch Daniels’ administration.

    Source: Indianapolis Courier Press, 13 May 2010

    This is typical of the individual states, with some (California, Arizona and New Mexico) getting hit much worse than most other states because of the large number of illegal immigrants who will get immediate Medicare coverage under the HCR bill. All states will see Medicare costs skyrocket.

    For evidence that the HCR “reform” bill does not control costs and actually increases current health care costs for typical middle class families, see this link. Yes, this link contains detailed facts about the bill pointed out by Jane Hamsher, and yes, we all know that the kooks and cranks and crackpots on this forum hate Jane Hamsher, so when Hamsher points out that a circle is round, you’ll all scream that she’s wrong. Wake up, crackpots: facts remain facts even when people you don’t like cite ’em.

    Access to the “high risk pool” is limited and the pool is underfunded. It will cover few people, and will run out of money in 2011 or 2012

    Only those who have been uninsured for more than six months will qualify for the high risk pool. Only 0.7% of those without insurance now will get coverage, and the CMS report estimates it will run out of funding by 2011 or 2012.

    [op. cit.]

    In fact, brachiator, you clearly and obviously don’t know what’s in the HCR bill passed by congress.

    The [high-risk pool] program will be temporary, a bridge to 2014, when denial of coverage for medical reasons will be against the law, and new insurance markets will offer taxpayer subsidized coverage for millions. Number crunchers at Medicare estimate that 375,000 people will sign up this year.

    Got that, brachiator? The state high-risk pools are a temporary bridge to get states to 2014, when most of the HCR legislation kicks in. However, because the state high-risk pools kick in now and only 5 billion dollars has been allotted to fund it,Medicare economists estimate that the high-risk pools will run through all their funding and exhaust that fund by 2011 — leaving the individual states to foot the bill for the high-risk pools between 2011 and 2014.

    the $5 billion that Obama and Congress set aside may not be enough to support even a basic program for long. (..) A recent report by Medicare economists warns that the program could go through $4 billion in its first year, and run out of money as early as 2011.

    Source: Existing High Risk Pools Could Lock Some More Expensive Health Care Coverage.

    You really want to have some idea of what you’re talking about, brachiator, before you accuse other people of “making stuff up” when they’re stating the documented facts.

    The high-risk pools are so underfunded that they amount to an unfunded mandate — a gigantic unfunded mandate on all the states, imposed by the recent HCR bill, which will cause all the states to bleed even more red ink than they already are. The people in the high-risk pool (whch goes into force immediately, today, right now, precisely becaue it is a bridge program to fill in between today and 2014) are
    some of the sickest people in America — thus their medical expenses are by far the highest of any group in the U.S. health care delivery system. These people with sky-high health care costs are the ones the HCR bill requires states to cover immediately, and that’s why the 5 billion set aside for the high-risk pool will get exhausted almost immediately and run out by 2011, leaving the states in a deep deep hole of red ink that they’ll have to pay for at the very time when the state budgets around the country are falling into deficit black holes.

    This is what happens when health care lobbyists write the health care “reform” legislation and democrats cave in to the corporate sharks. Essentially, this is all a cheap accounting trick designed to make it seem as though 15 million uninsured people are getting health care by dumping ’em into the state high-risk pool…but in actual fact, since the high-risk pool will run out by 2011 and the states are already broke, those 15 million uninsurable people will wind up getting thrown onto the street with no health care at all, because the states can’t even afford to keep their state offices open and can’t even afford to pay for electricity or garbage collection in many areas.

    Recently the governor of Nevada made an emegency address because the fiscal crisis was so severe that many state offices couldn’t afford to keep their electricity on. California continues to spiral downward, mandating furloughs for state employees and shutting down the state MediCal program. Michigan has declared an ongoing state of fiscal emegency…and so on.

    Google “Recession continues to batter state budgets” by Elizabeth McNichol and Nicholas Johnson.

    Large gaps for 2011 and beyond. States’ fiscal problems will continue into the next fiscal year and likely beyond. Fiscal year 2011 gaps — both those still open and those already addressed — total $112 billion or 17 percent of budgets in 46 states. This total is likely to grow as revenues continue to deteriorate, and may well exceed $180 billion. States will also face large gaps that could total $120 billion the following year (FY2012).

    Gaps in 2010 budgets. These new shortfalls are in addition to the gaps states closed in their fiscal year 2010 budgets. Counting both initial and mid-year shortfalls, 48 states have addressed or still face such shortfalls in their budgets for fiscal year 2010, totaling $200 billion.

    Declining federal assistance. Federal aid to states provided in the American Recovery and Reinvestment Act has lessened state cuts in services and tax increases. But the aid is now mostly gone; only about $40 billion remains to help with 2011 fiscal problems. (..)

    Combined gaps of $260 billion for 2011 and 2012. These numbers suggest that when all is said and done, states will have to deal with total budget shortfalls of some $260 billion for 2011 and 2012.

    [op. cit.]

    Of course, brachiator will continue to deny these documented facts because (like the global warming deniers) that’s what people typically do in today’s political discourse when they encounter facts they don’t like. So let’s hammer the reality home with this article by the New York Times:

    Because of the new health care law, Arizona lawmakers must now find a way to maintain insurance coverage for 350,000 children and adults that they slashed just last week to help close a $2.6 billion budget deficit.

    Louisiana officials say a reduction in federal money to hospitals that treat the uninsured under the bill could be a death knell for their state-run charity hospital system.

    In California, policymakers estimate they will have to come up with an additional $500 million a year to make necessary increases in payments to Medicaid providers.

    Across the country, state officials are wading through the minutiae of the health care overhaul to understand just how their governments will be affected. Even with much still to be digested, it is clear the law may be as much of a burden to some state budgets as it is a boon to uninsured consumers.

    Source: “Some States Find Burdens in Health Law” by Michael Luo, New York Times, 26 march 2010.

    Medicare economists are not “making things up,” brachiator. The New York Times is not “making things up.” The governors of Louisiana and Indiana and California and Arizona are not “making things up.”

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