State Budgeting Issues

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To say it’s been a rough span of years for the state and local governments would be an understatement during this recession. From 2008 to present day all states have struggled to balance their budget and not run a deficit. Throughout American history, this is said to be the worst recession since 1947 after World War II. Revenues fell substantially and unemployment went into the double digits. Throughout this struggle we’ve seen cuts in education, public services, increases in taxes and spending cuts. This recession has affected businesses and residence raging from young to elderly. The federal government has stepped in to help by providing the American Recover and Reinvestment Act (ARRA) but this eventually will spiral down to its finish as well. Some reasons states found themselves in this position is because states are required to balance the budget each year, revenues fell and there was little money in reserve for each state in this emergency situation. With all of these issues unsolved and unchanging the state’s governments have gone through a tough time trying to dig themselves out of the financial down fall they have all experienced. The states by federal law are required to balance their budget every year unlike the federal government. The states also cannot run a deficit, or spend money that they do not have in upcoming fiscal year. The states must eradicate their budget gaps by cutting spending, increasing taxes, cutting services and drawing on reserve funds. The first problem that the states faced is they had no emergency funds. During this recession the federal government created a stimulus law for the states, the American Recovery and Reinvestment Act (ARRA). In this act it provided $787 billion and the state governm... ... middle of paper ... ...y wisely and create an emergency fund to help insure in future cases that if the federal government were not able to bail them out they could stand alone without making huge increase income and property taxes and spending cuts. The states cannot solely rely on income and sales tax because when a recession hits these types of income for the budget decrease rapidly. A weak structure of the states need to significantly improve to come away from this budget crisis we face each year. Works Cited Abramsky, Sasha. "Nevada Goes Bust." The Nation (2010): 1-5. Print. Gerst, Jeremy, and Daniel Wilson. "Fiscal Crises of the States: Cause and Consequences." Economic Letter (2010): 1-5. 28 June 2010. Web. 20 Nov. 2013. Wilson, Daniel. "FRBS Economics Letters: Are Fiscal Stimulus Funds Going to the "Right" States?" Economic Journal. N.p., 17 Apr. 2009. Web. 20 Nov. 2013.

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