June 28, 2011 / 9:16 PM / 8 years ago

Nearly half US states close budget gaps with cuts-CBPP

WASHINGTON, June 28 (Reuters) - A majority of U.S. states have passed their budgets for the fiscal year starting July 1, according to the Center on Budget and Policy Priorities.

As of Monday, 32 states had enacted their budgets, with at least 24 slashing spending on public services, as they are still gripped by the effects of the recession, the think-tank that tracks states’ fiscal conditions said on Tuesday.

For almost all states, the new fiscal year begins July 1.

State revenues have begun to improve from their collapse during the longest and deepest economic downturn since the Great Depression. At least 20 states say their tax collections this fiscal year exceeded the amount expected when they drafted their budgets.

Almost all states, though, had to close budget gaps because revenues remain below pre-recession levels. Those gaps totaled more than $100 billion.

All states except Vermont must end their fiscal years with balanced budgets. They have spent years hiking taxes, cutting spending and turning to the federal government for help. But with the federal government saying it will not “bail out” states and voters’ appetite for tax increases nonexistent, most states are cutting spending.

The spending cuts are hitting education in many states.

For example, Georgia is finding savings in its pre-kindergarten programs. Michigan is cutting education in an amount that equals $470 for each public school student, while Washington is cutting an amount equal to $1,100.

Mississippi will spend $237 million less on its schools than its state-imposed funding formula requires. New York will not implement a court order to fund poor school districts to save $1.3 billion and North Carolina will cut half a billion dollars from education for the next two years.

“Overall, governors proposed 2012 spending levels of 9.4 percent below 2008 levels, adjusted for inflation; while legislatures are making some changes, it is unlikely that the overall trend will be very different from what governors proposed,” said CBPP.

Since August 2008, state and local governments have cut 535,000 jobs and “are forecast to continue to cut tens of thousands of additional positions each month,” CBPP said. (Reporting by Lisa Lambert; Editing by Dan Grebler)

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