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Home :  Federal Budget & Tax : 
Federal Budget & Tax:      News     Blog     Background    



Thursday, January 31, 2008

More Bad News for State Budgets

It seems things are getting worse out in the states, almost by the day. The Center on Budget and Policy Priorities has released another update of their analysis first released last week, adding one more state (Illinois) to the list of states facing a budget crunch in 2009. Now there are 20 states that are projecting budget gaps in 2009. The updated summary stats from CBPP:

More than half of states anticipate budget problems, according to this updated analysis of state fiscal conditions.
  • 20 states now project budget gaps for 2009. Illinois joins this list.
  • The combined budget shortfall for these 20 states in 2009 is now at least $34 billion.
  • 5 states now say they will have 2009 deficits, but have released no further information.
  • 3 other states project budget gaps for 2010 and beyond.

CBPP: 20 STATES FACE TOTAL BUDGET SHORTFALL OF AT LEAST $34 BILLION IN 2009





Posted by Adam Hughes, 04:11:25 PM



Tuesday, January 29, 2008

Infrastructure Begins in Washington

Bob Herbert's column in the NY Times today elevates an important issue that has been swirling under the radar the last few years in Washington and around the country but has not garnered enough attention - lack of infrastructure investment. Herbert highlights the work of Sens. Chris Dodd (D-CT) and Chuck Hagel (R-NE) to create a national infrastructure bank that would identify, evaluate, and help finance large-scale, long-term infrastructure projects across the country to rebuild and strengthen roads, bridges, levees, transit systems, water treatment facilities, schools, hospitals, electrical grids, and other key infrastructure sectors.

Dodd and Hagel are hoping to create a sense of urgency to address the growing infrastructure problems faced by the U.S., framing this as an economic issue as much as a quality of life concern. The need is certainly clear. From Herbert's column:

The need for investment on a large scale — and for the long term — is undeniable. According to the American Society of Civil Engineers, in a study that should have gotten much more attention when it was released in 2005, it would take more than a trillion and a half dollars over a five-year period to bring the U.S. infrastructure into reasonably decent shape.

...

As things stand now, the American infrastructure is incapable of meeting the competitive demands of the globalized 21st-century economy. Senator Hagel noted that ports are overwhelmed by the ever-expanding volume of international trade. Rail lines are overloaded. Highways are clogged.

Herbert's well-reasoned column reminded me of another commentary from the Times editorial board last week entitled "Charity Begins in Washington." This editorial argued there are many aspects of our society - namely social needs - that demand government investment and cannot be left to private philanthropy. Dodd and Hagel have certainly made a strong case that infrastructure projects also warrant considerable and sustained federal investment.

Read more about the Dodd-Hagel National Infrastructure Bank Act of 2007.
Bill summary and letters of support





Posted by Adam Hughes, 05:22:27 PM



Projections of State Budget Shortfalls Deteriorate

The Center on Budget and Policy Priorities released an update to their analysis last week, which now shows more than half of the states are facing a budget crunch in 2009. As we've commented, this isn't good news, as state budgets are far less flexible than the federal budget and usually are legally prohibited from running a deficit. From the CBPP update:

More than half of states anticipate budget problems, according to this updated analysis of state fiscal conditions.
  • 19 states now project budget gaps for 2009. New Hampshire, Ohio and Wisconsin have joined this list since our last update
  • The combined budget shortfall for these 19 states in 2009 is now at least $32 billion.
  • 6 states now say they will have 2009 deficits, but have released no further information.
  • 3 other states project budget gaps for 2010 and beyond.

CBPP: 19 STATES FACE TOTAL BUDGET SHORTFALL OF AT LEAST $32 BILLION IN 2009





Posted by Adam Hughes, 10:28:25 AM



Wednesday, January 16, 2008

CBPP: States Facing Budget Crunch

The Center on Budget and Policy Priorities released an analysis yesterday forecasting that as least 21 states will face budget shortfalls due to reduction in sales tax collections and other tax revenues in the next fiscal year. This isn't good news, as state budgets are far less flexible than the federal budget and usually are legally prohibited from running a deficit. From the report's introduction:

The bursting of the housing bubble has reduced state sales tax revenue collections from sales of furniture, appliances, construction materials, and the like. Weakening consumption of other products has also cut into sales tax revenues. Property tax revenues have also been affected, and local governments will be looking to states to help address the squeeze on local and education budgets. And if the employment situation continues to deteriorate, income tax revenues will weaken and there will be further downward pressure on sales tax revenues as consumers become reluctant or unable to spend.

The vast majority of states cannot simply run a deficit or borrow to cover their operating expenditures. As a result, states have three primary actions they can take during a fiscal crisis: they can draw down available reserves, they can cut expenditures, or they can raise taxes. States already have begun drawing down reserves; the remaining reserves are not sufficient to allow states to weather a significant downturn or recession. The other alternatives — spending cuts and tax increases — can further slow a state's economy during a downturn and contribute to the further slowing of the national economy, as well.

CBPP: 14 States Face Total Budget Shortfall of at Least $29 Billion in 2009; 12 Others Expect Budget Problems





Posted by Adam Hughes, 07:03:38 PM



Friday, January 11, 2008

Contact Us!

Questions, comments, suggestions, and glad tidings can now be directed to the BudgetBlog inbox at:

(In an effort to prevent spam, our contact address appears as an image and without a link to the address.)

Posted by Craig Jennings, 11:49:37 AM



Thursday, January 10, 2008

Impact of Insufficient Appropriations

While we reported in December that Congressional Democrats had caved to President Bush's top-line appropriations number (while still attempting to fund their priorities), some things were certainly underfunded. Case in point is the Argonne National Laboratory in Darien, IL. Darien Suburban Life newspaper reports on the cutback:

Argonne Director Robert Rosner said in a memo to staff last week the cuts stem from unexpected reductions in Washington brought about by the Congressional budget appropriations bill passed in December.

Argonne's news followed the announcement of similar cuts at Batavia-based Fermilab, which learned in late December it will have to lay off as many as 200 employees due to cuts.

Director Rosner went on to say he thought the cutbacks would have a negative effect on morale at the lab, but that they would prevail. I'm not sure how they are going to do more scientific research with fewer people and resources, but perhaps Director Rosner has some tricks up his sleeve.

I suspect similar cutbacks will happen at other national labs around the country, slowing the pace of scientific discovery and development of new technologies. Remember that the U.S. government has developed numerous things through scientific and technological research that have been extremely valuable to our society. Space blankets, penicillin, the internet, and velco are only a few examples. It's too bad our elected officials can't prioritize funding for these important investment.





Posted by Adam Hughes, 10:41:13 AM




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