State budget shortfall - November 29, 2010
Note: Following states have updates: California; Georgia; Idaho; Maine; Mississippi; New Mexico: Maryland; Maine; New York Oregon; Pennsylvania; Rhode Island; Texas; Washington and Wisconsin.. Changes are indicated in italics.
There will be 29 new governors! Republicans has a net gain of six Governor’s. NCSL.org November 10, 2010. Republicans made historic gains by adding over 675 legislative seats. NCSL.org. November 10, 2010
New state GOP leaders itching to get started. Statelineorg. November 9, 2010
Some states weight unthinkable option: ending Medicaid. WSJ. November 22, 2010http://online.wsj.com/article/SB10001424052748704444304575628603406482936.html?mod=WSJ_hp_MIDDLENexttoWhatsNewsTop
Pensions and Retirees Health Care:
1. The Center for State and Local Government Excellent has created an interactive map showing a sample of state and local governments that have negotiated changes in pension plans. Center for State & Local Government Excellence. November 15, 2010
2. The Rollback on public pay and pensions begins. Investors.com. November 10, 2010
3. Dire outcome predicted for municipal pension systems. Cities and counties could add $574 billion to the $3 trillion in unfunded liabilities for the states. Kellogg School of Management. October 12, 2010. http://www.kellogg.northwestern.edu/News_Articles/2010/municipal-pension-systems.aspx
4. NCSL September 1, 2010. http://www.ncsl.org/?TabId=20836.
5. States cutting public sector retirees benefits. http://www.google.com/hostednews/ap/article/ALeqM5gvkRQqiPV1eRXDaSrTWohTaZY3igD9I87UJO0.
6. Amid backlash and budget deficits, government workers’ pensions are targets. Washington Post. October 6, 2010. http://www.washingtonpost.com/wp-dyn/content/article/2010/10/05/AR2010100506187.html
7. The “Build America” Debt Bomb masks real financial situation of state and local governments. WSJ. November 22, 2010.
State burden per capita for public debt. This does not included unfunded pension and retiree health care obligations; unemployment insurance loans from the federal government; etc. CNNMoney.com. October 3, 2010.
CATO released its “Fiscal Policy Report Card on America’s Governors: 2010” http://www.cato.org/pub_display.php?pub_id=12173. September 30, 2010NY Post analysis finds that “major city infrastructure projects undertaken as past of the federal stimulus package have yet to generate even a fraction of the thousands of promised jobs. NY Post. September 6, 2010.
States can no longer dodge the budget axe. WSJ. August 17, 2010. Given for rehiring, schools wait and see. NYT August 18, 2010
Center on Budget & Policy Priorities projects that the states will face a cumulative state budget shortfall of $140 billion in the coming year. This number is grossly inflated due to the manner in which the Center calculates shortfalls- (the difference between what Governors want to spend and the previous budget). It is not the difference between the previous budget and the revenue forecast for the next budget. Center on Budget & Policy Priorities. June 29, 2010.
Reset (downsize) Government. The good news is that more and more states are recognizing the need to significantly downsize government. The bad news is that few states other than Indiana have taken the action necessary to “reset” spending. A recent report by the National Governor’s Association states that states will face budget deficits totally $134 billion over the next three years. Vermont Gov. Jim Douglas said, “The worse is probably yet to come.
The National Governors Association and National Association of State Budget Officers released their Fiscal Survey of the States on June 3.
1. Complete report: http://www.nga.org/Files/pdf/FSS1006.PDF
2. Press release on report: http://www.nga.org/portal/site/nga/menuitem.6c9a8a9ebc6ae07eee28aca9501010a0/?vgnextoid
3. Proposed FY 2011 spending is $52 billion less than FY 2008. http://www.nga.org/Files/pdf/FSS1006CHARTSPENDING.PDF. NOTE THIS IS GROSSLY OVERSTATED. IN YOUR STATES GET THE TOTAL ALL FUNDS SPENDING. GENERAL FUND- STATE SPENDING MAY HAVE BEEN CUT, BUT IN MOST STATES THEY USED OTHER FUNDS. BORROWED MONEY AND FEDERAL STIMULUS FUNDS TO ACTUALLY INCREASE SPENDING.
4. State budget gaps. http://www.nga.org/Files/pdf/FSS1006CHARTSPENDING.PDF/ Same comment as 3 above plus in many cases the “closed budget gaps” is the difference between what governors wanted to spend and the revenue forecast - it had nothing to do with the current budget vs the previous budget Request total general fund spending and total all funds spending for last budget; current budget and next years’ budget and do your own analysis. .http://www.nga.org/Files/pdf/FSS1006CHARTBUDGETGAPS.PDF
5. The State Fiscal Situation: The Lost Decade. http://www.nga.org/Files/pdf/0911FISCALLOSTDECADE.PDF
6. Webcast video: http://millercenter.org/scripps/archive/forum/detail/5700
Legislators of both parties allow bureaucrats to report a budget shortfall as the difference between what the governor wants to spend (not the current budget) vs the revenue forecast. We have not found any state that reports a shortfall as the difference between the current level of spending and the revenue forecast. Thus, most shortfalls are highly inflated.
Unemployment Insurance: Unemployment insurance and the amounts that states are borrowing from the federal government will be a big issue for many states over the next few years. The U. S. Department of Labor in their July 2010 Unemployment Insurance Outlook stated:
1. “Outlays from state trust funds accounts are projected to exceed revenues and interest income by $27.48 billion in FY 2010 and $18.09 billion in FY 2011.”
2. “State trust fund account balances, net of loans, are projected to continue to fall, from $3.2 billion at the end of FY 2009 to -$60.9 billion at the end of FY 2013, before starting to grown again. Net balances are not projected to become positive again until well beyond 2015.”
3. “Very large amounts of borrowing from the Federal Unemployment Account (FUA) are projected over the next few years. The balance of outstanding loans is projected to increase from $17.4 billion at the end of FY 2009 to a peak end-of-the-year balance of $65.2 billion in FY 2013.This peak balance is almost $30 billion less than projected for the Presidents budget. A total of 35-40 states are expected to borrow.”
Alabama-$600 million state budget shortfall for the 2011 budget solved by using federal funds and the state’s rainy day funds. The Institute for Southern Studies. May 22, 2010.
Arizona-State faces up to an $825 million state budget shortfall. YumaSun.com October 2, 2010.
California –Governor calls special session and will declare emergency to solve $6.1 billion state budget shortfall in current year. LA Times. November 11, 2010
-States faces $25.4 billion state budget shortfall over the next 20 months. SFGate.com November 11, 2010.
-California to sell 24 Government Buildings for $2.3 billion. CNBC.com October 12, 2010.
Legislature is expanding pension benefits and make it impossible for local government to declare bankruptcy when they can’t pay their bills because of personnel costs. Calwatchdog. August 30, 2010.
Colorado-State faces $1.1 billion state budget shortfall in FY 2011-12. Denver Post. September 26, 2010.
Connecticut—Fitch cuts rating to AA because Connecticut is borrowing $956 million to close their state budget shortfall. EconomicPolicyJournal. June 5, 2010.
-State solves state budget shortfall for FY 2010-11 by using federal stimulus funds and raiding funds for energy conservation and other dedicated funds. FY 2011-12 budget shortfall is projected to by $3.8 billion. Connecticut Commentary. May 8, 2010.
Delaware-$278 to $342 million state budget shortfall. Do Delaware online. January 10, 2010
Florida-State budget shortfall cut in half by state analysts who credit federal stimulus dollars, years of spending cuts and Indian gambling money as helping to forge a brighter picture but still leaving a $2.5 billion shortfall. Tampabay.com. September 8, 2010.
Georgia- Estimated state budget shortfall of more than $1 billion for FY 2012. Talkgwinnett.net. November 19, 2010.
Hawaii-State forecasts expenditures to exceed revenue for the next three years. Hawaii Tribune Herald June 17, 2010
-Investments gone bad. State has $1.1billion in auction-rate securities and has already written off $250 million. Stateline.org. May 17, 2010
Idaho-Estimated state budget shortfall of $340 million for FY 2011-12 budget. KIDK.com. November 19, 2010
- State delays payments to hospitals and nursing homes in order to meet state budget shortfall. Times-News Magic Valley.com. March 28, 2010
Indiana –Indiana ended fiscal year 2009-10 on June 30, with a balance budget but reserves have dropped to $830 million as of June 30. State Auditor is forecasting reserves will drop to $188 million by June 30, 2011. NWI.com. July 19, 2010
Illinois –State Senate debates $4 billion borrowing to cover upcoming pension payment. State has a state budget shortfall of $14 billion. The Huffington Post. November 10, 2010.
-State and local unfunded pension liability is more than $200 billion. Chicagotribune.com. August 13, 2010.
-NCSL reports Illinois has worse financial situation of all the states; however, total state spending is up 15.1 percent!!! WBEZ91..5 July 27, 2010
–Why Illinois’ budget is broken and what to do about it? Illinois Policy Institute. April 21, 2010. Illinois Policy Institute released a Policy Brief on how to solve the state’s $83 billion unfunded pension liability and state budget crisis. Illinois Policy Institute. January 10, 2010.
Iowa-State faces $32 million state budget shortfall for current fiscal year. The Iowa Independent. August 5, 2010.
-State faces a state budget shortfall of nearly $1 billion (18.6%) of budget for FY 2012. Daily Iowegian. July 29, 2010.
Kansas-State expects $179 million from federal stimulus legislation. Bloomberg Businessweek. August 13, 2010.
-Raised taxes by $314 million including Increasing sales tax by 1 cent and raising unemployment taxes by $163 million to eliminate state budget shortfall. However, total general fund spending is UP (INCREASED) by 3.8 percent or $204.5 million. Total all funds spending is UP (INCREASED) BY MORE THAN 5 percent. Kansas Reporter. May 11, 2010.
Kentucky –Key Kentucky state worker pension fund in distress. Courier-Journal. August 29, 2010.
-Gov. Vetoes 19 parts of state budget designed to eliminate state budget shortfall. Governor must make $131 million in cuts in FY 2010-11 and $168 million of cuts in FY 2011-12. Kentucky.com. June 5, 2010.
Louisiana-Governor orders $107 million in cuts to eliminate state budget shortfall. Bloomberg Businessweek. October 22, 2010.
-Corrections agency may sell off prisons. 2theadvocte.com. October 14, 2010
-State ended fiscal year (June 30, 2010) with a $108 million deficit and faces at least a $1.6 billion state budget shortfall next year. Bloomberg Businessweek. October 6, 2010
Maine-State budget shortfall of $840 million for next budget. The Portland Press Herald. November 27, 2010.
-Maine has over a $2 billion unfunded liability for public employee’s retiree health care costs. Maine Watchdog. June 16, 2010.
Maryland –Maryland is expected to have a $1.6 billion state budget shortfall for FY 2011-12. Washington Post. November 11, 2010.
Massachusetts-Budget reduces spending by hundreds of millions of dollars to take care of an expected loss of $687 million in federal stimulus funds. News Telegram.com. June 25, 2010.
Michigan-State faces a $1 to $1.5 billion state budget shortfall for FY 2011-12. ABCNews.go.com. October 21, 2010.
-The Paying Class vs. the Government Class. Mackinac Center. May 3, 2010.
Minnesota--Gov. signs pension overhaul after threatened to veto it because it lacked sufficient reform and would add to the state’s long-term budget deficit. StarTribune.com. May 16, 2010.
-Legislature approves budget that closes $3 billion state budget shortfall. The measure fixes the short term budget problem but could make next year’s budget a more difficult life. $1.9 billion of the $3 billion solution was delaying one-third of the K-12 budget until the next fiscal year. This would force some school districts to do short-term borrowing and others to use reserves.
Mississippi- State faces $634 million state budget shortfall for FY 2012. thegovmonitor.com. November 16, 2010.
Missouri-State faces $1 billion state budget shortfall for FY 2012. Kansas City Business Journal. August 5, 2010.
Montana-State faces $388 million state budget shortfall in FY 2011-12 budget. Projected surplus this year of $236 million will help offset this shortfall. Bloomberg Businessweek. October 8, 2010
Nebraska –State budget shortfall tops $1 billion for current budget shortfall ending June 30, 2013. Omaha.com. October 30, 2010
Nevada-Pensions contributions to increase, unfunded liability climbs to $10 billion. Nevada News Bureau. November 10, 2010.
Budget director says major changes needed to fund government services and eliminate an estimated $3 billion state budget shortfall in FY11-12 budget. ThisisReno.com. August 10, 2010.
Many legislators unaware of tax increase they voted for –to extend higher sales tax for road work indefinitely. Las Vegas Review-Journal. May 17, 2010
-State closes a 22 percent state budget shortfall by reducing spending for most agencies by 10 percent; result in four-day work weeks of 10 hours a day for most state workers. Legislature also hiked fees totaling $50 million. Stateline.org. March 1, 2010
New Hampshire –State Retirements system approves shell game to remove part of their budget from legislative oversight. NewHampshireWatchdog.org
-State faces $800 million state budget shortfall. Sentinelsource.com. Sept. 22, 2010.
–A new way on retiree health care costs. Stateline.org. May 12, 2010
New Jersey-Governor promises “serious reform” on pensions. Watchdog.org6463. September 7, 2010.
-SEC charges NJ with securities fraud for not disclosing to municipal bond investors that it was underfunding its pensions. Reuters. August 18, 2010.
-State faces $10.5 billion state budget shortfall for FY 2011. APP.Com. July 22, 2010.
-Governor signs budget that will reduce state spending for the third year in a row. The total state budget is now at roughly the same level it was in 2005. Pensions were underfunded by $3 billion. NJ.com. June 30, 2010. Governor vetoes three bills. Result will save taxpayers $132 million. Government monitor. July 24, 2010.
New Mexico-State budget shortfall grows to $452 million. Bloomberg Businessweek.com. November 11, 2010.
New York –Gov. Patterson calls special session for Nov.29 to address $315 million state budget shortfall in current year’s budget. New York Daily News. November 24, 2010
Governor-elect Cuomo says no tax hikes; will cut schools, health to solve $9 billion state budget shortfall. WSJ November 9, 2010.
–Manhattan Institute release study showing NY taxpayers have a $205 billion unfunded liability for retired state and local government employees. Empire Center. October 13, 2010
-Legislators agree on budget, four month late to solve state budget shortfall. This included raising roughly $1 billion by increasing taxes on the sale of clothing and on a variety of businesses. NYTimes August 3, 2010.
—State Comptroller points out that despite the state budget shortfalls, state spending was increased $9.6 billion or 7.6% over the previous budget. The Senate still has not voted on the revenue part of the budget! Comptroller points out that a midyear budget deficit is possible due to budget gimmicks. Democrat and Chronicle. Com. July 15, 2010.
North Carolina – State faces up to a $4 billion state budget shortfall in next budget. ABClocal.go.com. October 20, 2010
North Dakota- State is forecasting a $696 million surplus for the fiscal year ending June 30, 2011. Inforum.com. September 22, 2010
Ohio-Public pension system refuses to disclose public records. Cleveland.com. August 11, 2010
$8.4 billion in one-time money was used to close state budget shortfall in current budget. Columbus Dispatch. August 11, 2010
-State faces $8 billion state budget shortfall for 2011-13. $4.9 billion in one-time money was used to solve the current 2009-11 state budget shortfall. Columbus Dispatch. June 29, 2010
Oklahoma-The coming explosion of Oklahoma’s pension bomb. OPAThink.org. page 10. October 10, 2010.
-Democrat Governor, GOP leaders announce budget deal to solve $1.2 billion state budget shortfall for the fiscal year beginning July 1. State spending will be reduced by about 7.6 percent; AP. May 21, 2010.
Oregon-State budget shortfall for FY11-13 is now $3.5 billion. NRToday. November 23,2010.
- Hard Choices: Oregon governor, Legislature face grim menu on worker pay. Oregonian. October 24, 2010.
-Hard Choices; Oregon State worker pay is a pivot point for budget showdown. Oregonian. October 23, 2010.
-Gov. Ted Kulongoski says recession forces Oregon state government to rethink how it operates. Oregonian, June 24, 2010. Some amazing recommendations from a liberal governor:
-Gov. called for reducing state worker benefits, shortening some mandatory sentences for criminals and making schools more accountable for the state money they spend. He called for state employees to pick up a portion of their pension and health insurance costs.
-some interesting quotes from Gov. Kulongoski.
-“The current structure of state government is simply not sustainable anymore.”
-“Increasing labor costs will be a big contributor to future deficits if we do not change the way we budget and provide compensation for public employees”
-“Add health care costs to retirement costs and we will soon be looking at benefit increases for public employees that far exceed the increases to pay and benefits projected for their private sector counterparts.”
-Governor’s Reset Cabinet released preliminary report which forecasted a decade of deficits unless corrective action was taken next year. Governor’s Reset Cabinet. May 2010.
Pennsylvania –Legislature passes legislation to defer significant pension costs to future generations and ignores reforming current defined benefit system. Commonwealth Foundation. November 15, 2010.
-Governor proposes $282 million state budget shortfall be solved largely with across-the-board cuts. Post-Gazette.com. August 12, 2010.
-Estimated $5 billion state budget shortfall for FY 2011-12. If Congress doesn’t provide additional federal stimulus funds the deficit will grow by $850 million. The Triad Voice. July 7, 2010.
Rhode Island – State budget shortfall for FY 2011-12 estimated at $365 million. WPRI.com. November 10, 2010
South Carolina –Governor vetoes 107 line-items and provisos in the state budget including counting on federal medical funds that may or may not come. State budget shortfall for 2011-12 is now projected at $1 billion. Thegovmonitor. June 10, 2010
South Dakota-$32 million state budget shortfall for FY 2011 and $107 million for FY 2012. Yankton press. January 30, 2010.
Tennessee–Legislature passes budget to eliminate a $1.5 billion state budget shortfall. Tennessean.com. June 5, 2010
Texas –Texas borrows $1.1 billion to repay U.S. for jobless benefits. Bloomberg.com. November 18, 2010.
-Governor considers dropping out of Medicaid. MySAnews.com. November 14, 2010.
-Trends in Texas Government: State Government Spending. Texas Public Policy Foundation. October 2010.
-Strengthening Texas’ Tax & Expenditure Limit. Texas Public Policy Foundation. October 2010.
–9,800 employees could be laid off as state faces up to a $21 billion state budget shortfall. Austin American-Statesman. September 19, 2010
Texas singled out for special treatment in federal stimulus bill –state will be punished for being fiscally responsible. Rickperry.org. August 9, 2010.
Utah- $700 million state budget shortfall. KCPW December 11, 2009.
Vermont—Governor & Legislative leaders agree the state could face a $112 million state budget shortfall for fiscal 2012-13. 5WPTZ.com. August 22, 2010.
-State budget shortfall of $150 million for the current year. could be $1 billion over the next four years. Brattleboro Reformer.
Virginia -Virginia surplus grows to $400 million. Richmond Times-Dispatch. August 18, 2010
-One-time tax infusions contribute to Virginia’s budget surplus. Gov. McDonnell filled much of the $1.8 billion in cuts to state agencies. However, he also deferred pension payments, used next year’s revenues and turned to one-time cash infusions to eliminate state budget shortfall. Old Dominion Watchdog. July 23, 2010.
Washington –Governor orders state unions to reopen contracts as state budget shortfall for current biennium grew by $395 million and the 2011-13 deficit grew to $5.7 billoin. SeattlePIblog. November 18, 2010.
-Governor says voters sent a no-tax message on election day and expect an all-cuts budget to solve the state’s $4.8 billion state budget shortfall next year. The News Tribune. November 10, 2010.
Governor orders 6.3% across-the-board-cuts effective October 1 to eliminate current budget deficit. WXXI.org. September 16, 2010. Evergreen Freedom Foundation believes it will be at least $9 billion.
-State Auditor says it is time to resize Washington state government’s footprint. Seattle Times. July 21, 2010. Evergreen Freedom Foundation believes budget shortfall will be at least $9 billion.
–Unemployment insurance taxes to rise more than 40% in 2011. Washington State Wire. July 20, 2010.
West Virginia –Legislators want stimulus answers. Charleston Gazette. August 10, 2010
-$150 -160 million state budget shortfall in FY 2011-12 budget. Charleston Gazette. June 7, 2010.http://sundaygazettemail.com/News/201006070756
Wisconsin-State faces $3.3 billion state budget shortfall. Examiner.com. November 22, 2010.
Wyoming-$300-325 million state budget shortfall. Trib.com April 2, 2009
