by Martin Denholm, Senior Editor
Friday, March 5, 2010
A “lost decade” of “permanent retrenchment.”
Quoted on Stateline.org, that’s how economist Raymond Scheppach, head of the National Governors Association for the past 26 years, sums up the “State of U.S. States.” He argues that when the recession began in December 2007, it kicked off a decade of deep spending cuts, job losses and a struggle for states to generate revenue.
So far, he’s right.
Since December 2007, U.S. states have collectively run up a $300 billion budget gap, according to the National Conference of State Legislatures.
And although the U.S. economy has rebounded strongly over the past two quarters, America’s states are still in big fiscal trouble. The first year or two after a recession is historically the worst time for states, as they try to recover and re-adjust their budgets.
For example, Stateline reports that…
Add in double-digit unemployment and the negative effect that it will have on consumer spending and you can see that this post-recession climate is arguably the worst that U.S. states have faced in post-war history.
As Susan K. Urahn, managing director of the Pew Center on the States, which tracks states’ fiscal health says: “This recession has cut too deeply. There’s no question that states are going to consider changes that in some cases could be dramatic.”
Investment U publisher Robert Williams digs deeper into the budget crises facing U.S. states in this eye-opening column about the fiscal state of emergency…