Governors’ Budgets Are Out, and They Aren’t Pretty

March 21, 2011 at 1:43 pm

Governors across the country have released their budgets for the coming fiscal year, and while states are facing serious problems — depressed revenues, rising human needs, depleted reserves, and the end of temporary federal aid — many governors could be making much smarter choices about how to respond.

For example, Ohio’s Governor John Kasich proposed last week to cut aid to local governments and libraries by more than $1 billion, reduce higher education funding by 11 percent and K-12 funding by 10 percent (equivalent to more than 16,500 full-time teachers’ salaries), and cut payments to health care providers that serve Medicaid beneficiaries by more than $700 million, among other cuts.  Yet his proposal contains no significant new revenues.

States’ basic problem remains the economy:  with state tax revenues still in a deep slump due to high unemployment and weak consumer spending, states face an estimated $112 billion budget gap for the upcoming year that they have to close.

Nevertheless, our updated analysis shows that many governors’ budgets rely entirely on program cuts rather than using every tool available, like bolstering revenues and tapping any available reserves.  As a result, most governors are proposing to keep spending below pre-recession levels (see map), even though states have more kids to educate and more people who need health insurance.

We’ve found the following trends:

  • Most states are proposing deep cuts to core services. Only Alaska and North Dakota, where oil revenues have propped up local economies, are proposing spending growth that comes close to meeting their residents’ needs.  Most other states are proposing cuts in services that threaten to undermine children’s education, low-income families’ health, and each state’s long-term prosperity.In Arizona, for example, Governor Jan Brewer has proposed eliminating health care for 100,000 people and slashing funding for public universities, which have already raised tuition significantly and eliminated a number of campuses, programs, and departments.  Combined with those previous cuts, Brewer’s proposal would bring per-student state funding down to 46 percent below pre-recession levels.
  • Some states are not using their rainy day funds. Eight states still have sizable rainy-day reserve funds — meant to be used exactly in times like these — but most aren’t planning to tap them next year.  For example, Texas is facing a shortfall of $27 billion for the coming two-year budget period, yet the state’s initial budget proposal ignores about $5 billion likely to remain in reserves and imposes deep cuts to school and health funding.
  • A few governors are making things worse by proposing tax cuts. Seven governors facing shortfalls are proposing large tax cuts, mostly for corporations, which means those states would have to enact even deeper spending cuts to balance their budgets.  For example, Governor Rick Scott in Florida proposes to cut the corporate income tax nearly in half in the coming fiscal year — costing the state an estimated $459 million — and eliminate it by 2018.  At the same time, Governor Scott is proposing large spending cuts in education, health care, and other areas.Fortunately, not every governor is being so shortsighted.  Seven governors have proposed to raise significant new revenue to replace a portion of the taxes lost due to the recession.  All of these governors are also cutting services — some deeply — but their revenue proposals reduce the spending cuts needed to balance the budget.

The budget process has now shifted to state legislatures.  In states whose governors are taking a balanced approach that includes revenues, lawmakers should follow the governor’s lead.  In states whose governors are proposing a cuts-only approach, legislators should address shortfalls using the full range of tools available to them.  There’s too much at stake to do otherwise.

Print Friendly

More About Erica Williams

Erica Williams

Erica Williams joined the Center in August 2009 as a Policy Analyst with the State Fiscal Project

Full bio | Blog Archive | Research archive at CBPP.org

1 Comments Add Yours ↓

Comments are listed in reverse chronological order.

  1. Russell Sykes #
    1

    I find it ironic that CBPP can make comments on individual Governor’s proposals without a broader context of each state’s actual fiscal circumstances. For instance as it relates to New York, comments on Governor Cuomo’s proposals regarding school aid simply assume that they will result in harm to the state’s students without understanding that most school districts carry reserve funds that can avoid teacher layoffs or reductions in important pupil services in order to help the state navigate unprecendented fiscal peril. I feel uniquely qualified to comment on this as a 12 year member of a rural central school district in New York where I was able to see firsthand the hyperbole that often guided reactions to any sensible fiscal suggestions for more efficient and cost effective operations. Viewed through your distant lens, CBPP anlaysis can appear to be erudite, but in reality your judgement, without additional facts, is mostly reacionary ideology. And, there is really no empirical proof that higher levels of spending per pupil result in better educational outcomes.



Your Comment

Comment Policy:

Thank you for joining the conversation about important policy issues. Comments are limited to 1,500 characters and are subject to approval and moderation. We reserve the right to remove comments that:

  • are injurious, defamatory, profane, off-topic or inappropriate;
  • contain personal attacks or racist, sexist, homophobic, or other slurs;
  • solicit and/or advertise for personal blogs and websites or to sell products or services;
  • may infringe the copyright or intellectual property rights of others or other applicable laws or regulations; or
  • are otherwise inconsistent with the goals of this blog.

Posted comments do not necessarily represent the views of the CBPP and do not constitute official endorsement by CBPP. Please note that comments will be approved during the Center's business hours. If you have questions, please contact communications@cbpp.org.




3 − three =

 characters available