Office of Planning and Budgeting

Long Recovery Time Anticipated for State Budgets

The Center on Budget and Policy Priorities has updated its ongoing state budget report: States Continue to Feel Recession’s Impact. On average, state tax collections increased 8.3 percent in 2011, but 30 states have so far projected $54 billion worth of budget shortfalls for Fiscal Year 2012, on top of the $530 billion worth of shortfalls closed by states since 2007. Even if revenue continues to increase at the same rate as it did last year, it would take over seven years for state budgets to recover to pre-recession levels.

As states continue to cut funding, including laying off government workers, unemployment remains over 8 percent and more people than ever are in need of government services, including education and social services. The report emphasizes the importance that increased tax revenue will likely have to play in the recovery of state budgets given how much spending has already been cut by states and how unlikely additional federal aid appears to be. Visit the CBPP website and blog often for updates on many state and federal budget issues.

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