North Carolina Coalition to End Homelessness

States Continue to Feel Recession's Impact

In a brief released in October 2010, the Center for Budget and Policy Priorities detailed the effect of the recession on state budgets. The report, "States Continue to Feel Recession's Impact," describes the sharp and continued constraint of state budgets, the implications of persistent unemployment, the effect decreased state revenue will have on social services, and the role the federal government can play in improving the financial circumstances of states.
According to the brief, virtually all states (48) began to see budget shortfalls in fiscal year (FY) 2009. Through a combination of spending cuts and withdrawals from rainy day funds, states have managed to close their budget shortfalls. But the persistent recession has translated into economic turmoil for many states: high unemployment keeps state income tax receipts low and an unsteady housing market keeps property tax receipts low. Flagging consumption and hesitancy (or inability) to spend on the part of residents only compounds the problem. For FY 2011, 46 states had to make up budget gaps totaling $125 billion before approving their budgets. And as states begin to take more dramatic measures - cutting staff, programs, vendors, and contracts - these reductions only perpetuate the cycle that lead to these declines as fewer and fewer people are able to put money back into the state economies.
Read the brief here on the Center on Budget and Policy Priorities' website.
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