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The Democratic Strategist

Political Strategy for a Permanent Democratic Majority

Not-So-Happy Fiscal New Year’s Eve

For all but four of the 50 states, the 2009 fiscal year ends today. And as P.J. Huffstutter and Nicholas Riccardi explain in the LA Times this morning, 32 of those states didn’t have a budget in place for the new fiscal year as of yesterday:

Although the majority of those are expected to pass eleventh-hour budgets, the fiscal futures of a handful remain uncertain, said Todd Haggerty, a [National Conference of State Legislatures] research analyst.
“It’s a lot of states that are coming down to the wire,” Haggerty said. “It’s far more than we’ve seen in the past, and it’s because of the state of the economy.”
Since 2002, only five states have been forced to shut down their governments. Some of the closures were brief: In 2007, Michigan’s doors were closed for four hours before lawmakers passed emergency measures that bought them time to close a $1.75-billion deficit.
“What’s different now is that the recession has eroded tax revenues across the country,” Haggerty said. Collectively, he said, states are wrestling with budget deficits totaling $121 billion.

The article identifies Arizona, California, Indiana, Mississippi and Pennsylvania as states that appear likely to undergo some sort of shutdown of government services tomorrow.
Most states have already cut services. According to the Center for Budget and Policy Priorities:

At least 39 states already have cut key services that are important to vulnerable residents. Cutbacks have affected health care (21 states); services for the elderly and disabled (23); K-12 schools (24 states); and higher education (32). Some 41 states have made cuts to their workforces, through furloughs, layoffs, cuts in benefits or other steps. These counts exclude still deeper cuts that have been proposed in many of the states still working on their 2010 budgets.

CPBB estimates that total state budget shortfalls through fiscal year 2011 exceed $350 billion–a lot of money by anyone’s standards. And the situation would be a lot worse if the federal economic stimulus package–even with significantly reduced levels of flexible assistance to state and local governments–had not been enacted. “States, on average, are using the money to fill about 40 percent of the gap between available funds and what they need to balance their budgets.”
So there won’t be any party-hats or champagne on tap tonight in state capitols. The fiscal situation for most is bad and getting worse.

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