Now that we have a new year approaching, it’s time to think about disaster.
No, not a blizzard, but state budgets. Dan Balz in the Washington Post gives the lowdown:
“From 1978 to 2008, state revenues grew by an average of 6.5 percent annually. In just one year (1983) did state revenues actually fall, and then by less than 1 percent. During 2009 10, states saw their revenues decline for five quarters, once by 16.8 percent.”
Revenues fell off a cliff, and now states will be cutting. We suspect rural counties will have more to lose.
The New York Times has a similar take in its lead editorial Sunday, finding that states are coping “with the greatest fiscal drought wince the Great Depression….”
Starved for revenue and accustomed to decades of overspending, many states have been overwhelmed. They are facing shortfalls of $140 billion next year. Even before the downturn, states jeopardized their futures by accumulating trillions in debt that they swept into some far off future.
But that future is not so distant, and the crushing debt has made recovery far more difficult to achieve. As The Times reported, Illinois, California and several other states are at increasing risk of being the first states to default since the 1930s. The city of Prichard, Ala., has stopped sending out its pension checks, breaking state law and shocking its employees.
And here the Times gets to the point, especially for rural counties, which may depend more on state and federal funding that more property rich urban areas:
Many conservatives have said the revenue decline is a good incentive for states to cut their spending. That is precisely what almost all states have done, because they are legally barred from running deficits. State spending fell by 3.8 percent in the 2009 fiscal year and 7.3 percent more in the 2010 fiscal year, the only significant declines since at least the 1970s, even as the cost of education and health care rose.
School aid, Medicaid, transportation, employee salaries, social services, courts — whatever there was to cut, states have slashed it, often at ruinous costs to the most vulnerable: the poor, the sick and disabled, students, tens of thousands of laid off workers.