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US states face wide budget deficits 6 years into economic recovery

US Rep. Ilhan Omar (D-MN) (L) talks with Speaker of the House Nancy Pelosi (D-CA) during a rally with fellow Democrats before voting on H.R. 1, or the People Act, on the East Steps of the US Capitol on March 08, 2019 in Washington, DC. (AFP photo)
The Illinois General Assembly is the state legislature of the US state of Illinois and comprises the Illinois House of Representatives and the Illinois Senate.

Many American states are still facing significant budget deficits even though the US economy is in its sixth year of recovery from the Great Recession.

Dozens of states continue to face major funding gaps that have locked state legislatures in prolonged battles with governors, threatening major spending cuts and widespread government layoffs, The New York Times reports.

Only 25 states have passed budgets for the 2016 fiscal year, according to the National Association of State Budget Officers, which tracks legislative activity.

In Illinois, fights over the state budget’s $3 billion shortfall have hit such an impasse that Governor Bruce Rauner, a Republican, issued a dire warning last week that a “major, major restructuring of the government” was imminent.

In Kansas, some Republicans have joined Democratic state lawmakers in blaming the state’s $400 million budget deficit on deep tax cuts passed in 2012 and 2013 at the urging of Governor Sam Brownback, a conservative Republican.

And in Louisiana, lawmakers in the Republican-controlled state legislature are in a standoff with Republican Governor Bobby Jindal as they struggle with a $1.6 billion shortfall.

“This is very different from past recovery periods, where you had fairly robust revenue growth at the state level,” said Scott D. Pattison, executive director of the National Association of State Budget Officers. “We’re not seeing enough revenue growth to solve some of the problems that we’re seeing.”

Fallout from the budget battles could well be significant.

School programs and class sizes could be affected if education funds are reduced.

Some states may have to resort to layoffs or furloughs, potentially leading to slowdowns in government services.

Many of the legislatures that are struggling with budgets can point to external forces, including slow economic recoveries and rising health care costs, for their woes. But many others have their own policy decisions to blame, budget experts say.

“A lot of governors have cut their taxes with the hopes that that would bring increased economic activity and they could postpone painful decisions about spending reductions,” said Tracy Gordon, a senior fellow at the Urban-Brookings Tax Policy Center in Washington. “But those increases in economic activity haven’t come to pass.”      

AHT/HRJ


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