State Budget Crisis

September 11, 2009 • Volume 19, Issue 31
Are permanent changes in spending needed?
By Alan Greenblatt


Once-secure state workers are facing layoffs and pay cuts because budget shortfalls. (AP Photo/Joe Sebo)
High-school librarian Melissa Payne, of Morrow, Ga., is starting the school year with $1,000 less in her paycheck. Across the country, once-secure state workers are facing layoffs, pay cuts and furloughs as states confront crushing budget shortfalls. (AP Photo/Joe Sebo)

State budgets always fall out of balance during recessions, but in the current downturn states are facing the worst budget crunch since the Great Depression. Over the past two years, states have had to close budget gaps exceeding $300 billion. Many have raised taxes, but they've mainly dealt with the challenge by cutting spending. State workers are facing layoffs and unpaid furloughs. Social services, including health insurance for children, are being cut dramatically. Even normally sacrosanct areas such as K-12 education and public safety are taking hits. The federal stimulus package included fiscal relief for states, but that money will soon run out. And states expect to face continuing problems. Their revenues will grow more slowly than they've come to expect over the past 30 years, leading some observers to wonder whether states have to make fundamental changes in the scope and scale of the services they provide.

ISSUE TRACKER for Related Reports
State and Local Governments
Feb. 26, 2021  State Finances
Sep. 11, 2009  State Budget Crisis
Oct. 03, 2003  State Budget Crises
Dec. 24, 1971  State Legislatures in Transition
Sep. 25, 1968  State Constitutional Reform
Oct. 11, 1967  Local Government Modernization
Aug. 15, 1956  Metropolitan Government
May 25, 1939  Reorganization of City Government
Feb. 24, 1939  Reorganization of County Government
May 23, 1938  Reorganization of State Governments
Oct. 29, 1937  State Control of Local Government
Sep. 01, 1936  Consolidation of Local Governments
Jan. 03, 1933  Reorganization of Local Government
Jun. 02, 1930  Changes in American City Government
Oct. 30, 1924  Political Statistics of the States
Deficit, Federal Debt, and Balanced Budget