State Workers, Taxpayers Caught in a Fiscal Vise
The badly needed economic recovery package included some substantial assistance for states that are facing growing budget shortfalls, possible layoffs and cuts in vital services. But despite critics’ noise about the amount of spending in the package, even with that helping hand, the fiscal outlook for states is still “dire” and likely will worsen, says the Center on Budget and Policy Priorities (CBPP):
The state fiscal situation is dire. Revenues are declining, and the need for services such as Medicaid is rising as people lose income and jobs….If revenue declines persist as expected in many states, additional budget cuts are likely. Budget cuts often are more severe in the second year of a state fiscal crisis, after reserves have been largely depleted and thus are no longer an option for closing deficits.
Even with the federal aid, CBPP estimates that states—which are required to balance their budgets each year—still face a $350 billion short fall in their operating budgets over the next 30 months. Most of the federal money will go to specific projects, such as infrastructure, Medicaid funding, education or local government needs. But not to the day-to-day operating budgets.
A stunning 43 states and the District of Columbia have fiscal year (FY) 2009 budget gaps totaling $89.2 billion. Midyear budget gaps for 41 states and the District of Columbia in FY 2009 already have reached $42 billion—on top of the $48 billion combined shortfall that 29 states had to make up when enacting their FY 2009 budgets. (Get more economic info and solutions at our Turn Around America site.)
That’s why Arizona, which already has laid off 350 state employees, may sell of government property to help balance its budget—and even then, could force more layoffs and cuts. Pennsylvania may lay off as many as 900 workers in July. New Jersey has announced furloughs for all state workers and may even look for salary givebacks.
As states develop their fiscal year 2010 budgets, working families are mobilizing to fight for their priorities.
In Minnesota, union, community and religious activists packed a dozen town hall meetings with state legislators to speak out against Gov. Tim Pawlenty’s (R) proposed budget that slashes public services and jobs.
The state’s budget woes have spurred the creation of a new coalition of union and community groups to seek long-term solutions to the state’s economic crisis. Read more about the new “Minnesota Recipe for Economic Security, Fairness and Opportunity” at Workday Minnesota.
Meanwhile in Oregon, while the state faces more than $700 million in a budget shortfall this year, unions, community and some business groups backed passage of a state-level stimulus package that could put thousands of Oregonians back to work and raise revenue for the state. It won legislative approval and was signed into law earlier this month.
The plan provides $175 million for construction, renovation and deferred maintenance at government facilities, universities and community colleges. Says Oregon AFL-CIO President Tom Chamberlain:
Every dollar earned by workers coming out of unemployment or every contract state agencies sign with a small business owner who can now avoid layoffs means more money spent at local businesses, rippling through that community many times over.
Yet despite the states’ fiscal crisis, as many as nine governors may turn down federal funds to help their states’ jobless workers—based on sheer ideological insanity that would deny the taxpayers of their own state’s badly needed assistance in pursuit of a national Republican strategy to trash the recovery bill.
The federal recovery package includes funds for states to extend and expand unemployment benefits that governors such as this week’s fallen Republican star Bobby Jindal of Louisiana find objectionable because the new rules allow more workers to qualify for help—and the last thing such far-right extremists want to do is aid more jobless workers.
Henry Kight is one of the nation’s 11.5 million unemployed workers. The 59-year-old Austin, Texas, engineering technician was laid off last year and denied benefits under the state’s complex rules. But under the provisions of the recovery package, he would qualify for unemployment aid. However, Gov. Rick Perry (R) says he will not accept the federal unemployment insurance funds, thus avoiding the new eligibility rules. Kight told The New York Times:
It just seems unreasonable that when people probably need the help the most, that because of partisan activity, or partisan feelings, against the current new administration, that Perry is willing to sacrifice the lives of so many Texans that have been out of work in the last year.
CBPP warns that any state that refuses stimulus funds will
weaken its economy [and] is also undermining federal efforts to run the economy around.