Budget and Spending

It’s no secret that the national debt continues to balloon. At nearly $14 trillion, the debt will only increase without substantial action, former U.S. Sen. Alan Simpson and former White House Chief of Staff Erskine Bowles, the co-chairs of the National Commission on Fiscal Responsibility and Reform, say. Their report predicts the debt will more than triple by 2035.

Policymakers across the country are facing one of the most challenging sessions in decades, due in large part to the economic woes caused by the Great Recession. From health care reform to the end of funding from the American Recovery and Reinvestment Act, here are some of the top issues facing legislators this year according to the policy staff at The Council of State Governments.

The advice Puerto Rico Gov. Luis Fortuño gave to policymakers about how to deal with the lingering budget crisis states are facing is similar to what one might say to a toddler trying to remove a bandage from a skinned knee.

“… Do it quickly, swiftly and go as far as you need to go in year one,” he said during Sunday’s lunch session, “Preview 2011: What’s Ahead for State Government.” “Don’t stretch this pain. Just do it as quickly as you can.”

Fortuño is no stranger to fiscal pain. When he took office in 2008, he...

Great nations can come crashing down in just one generation—not thousands of years as conventional wisdom dictates. That’s according to David Gergen, senior political analyst for CNN and professor at the John F. Kennedy School of Government where he is also director of its Center for Public Leadership.

“We’re into that caution light that is blinking at us saying, ‘watch out guys, we’re in serious trouble,’” Gergen said of America’s financial standing at Sunday’s opening session at The Council of State Governments 2010...

NOW, THEREFORE BE IT RESOLVED, that The Council of State Governments urges that the United States Congress extend the moratorium in place under the American Recovery and Reinvestment Act of 2009 on the payment and accrual of interest on state loans from the Federal Unemployment Account.

Unemployment rates remain high and people are unemployed for longer, exhausting state unemployment trust funds quickly. More states are borrowing from the federal government to cover costs, which could have an impact on future fiscal stability.

All signs are pointing to a revenue rebound for most states in the Midwest in fiscal year 2011. However, thanks in large part to a loss in federal funding, state lawmakers will face perhaps their biggest fiscal challenge yet in crafting FY 2012 budgets.

Taxes were the number one ballot issue across the states in 2010.  Across the country, voters in 37 states considered 160 ballot proposals, many of them related to fiscal and economic issues. The issues included property taxes, income taxes, sales taxes, fiscal limits, fees and miscellaneous taxes, rainy day funds, and changes to legislative procedures and voting requirements related to budget issues.

As voters determined who would be governing their states and the nation on Tuesday, they also made decisions on a myriad of ballot initiatives, referendums and legislative measures.  In total, there were 160 ballot proposals in 37 states, many of which were related to fiscal and economic issues.  According to the Initiative and Referendum Institute, taxes – as in past years – were the number one issue on state ballots in 2010.  Measures concerning property taxes found their way on to a number of state ballots this year, along with income taxes, sales taxes, fiscal limits, fees and miscellaneous taxes, rainy day funds, and changes to legislative procedures and voting requirements related to budget issues. 

This presentation on state fiscal issues covers five broad areas.   Part I highlights the fiscal position of states in the aftermath of the Great Recession while Part II highlights some state strategies to balance budgets and generate revenue.  Part III identifies several structural flaws in state tax systems that will continue to plague state finances going forward while Part IV explores some of the major expenditure categories looming on the state fiscal horizon.  Finally, Part V hones in on some of the “green shoots of growth” and the promising economic development projects that will contribute toward reviving state economies.

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