Outlook 2011: States Brace for Toughest Year Yet

State revenue receipts are down 12 percent from their pre-recession peak, and states have already sliced a combined $430 billion from the 2009, 2010 and 2011 budgets. While the majority of states aren’t facing budget gaps for the current year, the looming loss of federal funds through the American Recovery and Reinvestment Act means that most states are projecting major revenue gaps for next year. When stimulus dollars run out in June, that’s over $150 billion in flexible funds that will no longer be at states’ disposal. “We’re going to see austere state budgets for the next several years,” said Scott Pattison, executive director of the National Association of State Budget Officers. After outright declines in state spending over the past two years, sales tax and income tax revenues will rebound in 2011 and 2012, Pattison said. “But it won’t be enough new growth to make up for the loss of the stimulus funds and the rising costs of health care.”

See full article at Governing.com

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