The Wall Street Journal has never been known for its color artwork.
For the longest time its art was limited to black and white line drawings of people in the news. That is why last Thursday's front page may have been so stunning - much of the top half of the page showed the United States, in large chucks swathed in pink - and it wasn't a pretty pink. The reason#- an in depth review on the fiscal state of all 50 states.
Based on a report, also released last week by the National Conference of State Legislatures, it is clear that the next year for states is not going to be pretty. Numerous states from California to most of the East Coast are facing major shortfalls in their budgets that started after July 1 (New York was in bright red, with a shortfall of more than 8 percent expected). The bottom line is that the gap in next year's state budgets is a whopping $40 billion.
While it is easy to point to the recession the nation is in for the pain that states will be feeling, the causes are much deeper. The drop in housing sales, for example, has had more than a ripple effect on the economy.
Not only are the taxes generated by sales down, but it has meant a drop in construction and associated revenues from workers. Corporate income tax revenues are down, as best exemplified by the erratic financial markets. Unemployment is up and that has meant less in personal income tax revenues. Sales tax revenues, despite the influx of stimulus checks are also down.
For much of the nation, the high cost of fuel has also negatively impacted state and local budgets as well. As a foot note it looks as if the only states not facing such shortfalls are those who produce some form of energy products.
So what does all this gloom mean? If the economy doesn't make a miraculous recovery immediately, which is doubtful - you may see a couple of things occur.
First and foremost, especially if states have already hit the wall when it comes to raising fees and surcharges, that taxpayers can see large tax increases or radical program cuts or, mostly likely, a combination of both.
While New York Gov. David Paterson called for a 3.3 percent cut in executive department budgets soon after the state adopted its 2007-2008 spending plan in April, it is clear by his comments this week, and his statewide address last night, that more needs to be done.
That will require tough choices. It is not clear if the Legislature, all up for re-election this November, will go along before Election Day.
Cosentino is a former mayor of Auburn and can be contacted at cozguytho@aol.com
Based on a report, also released last week by the National Conference of State Legislatures, it is clear that the next year for states is not going to be pretty. Numerous states from California to most of the East Coast are facing major shortfalls in their budgets that started after July 1 (New York was in bright red, with a shortfall of more than 8 percent expected). The bottom line is that the gap in next year's state budgets is a whopping $40 billion.
While it is easy to point to the recession the nation is in for the pain that states will be feeling, the causes are much deeper. The drop in housing sales, for example, has had more than a ripple effect on the economy.
Not only are the taxes generated by sales down, but it has meant a drop in construction and associated revenues from workers. Corporate income tax revenues are down, as best exemplified by the erratic financial markets. Unemployment is up and that has meant less in personal income tax revenues. Sales tax revenues, despite the influx of stimulus checks are also down.
For much of the nation, the high cost of fuel has also negatively impacted state and local budgets as well. As a foot note it looks as if the only states not facing such shortfalls are those who produce some form of energy products.
So what does all this gloom mean? If the economy doesn't make a miraculous recovery immediately, which is doubtful - you may see a couple of things occur.
First and foremost, especially if states have already hit the wall when it comes to raising fees and surcharges, that taxpayers can see large tax increases or radical program cuts or, mostly likely, a combination of both.
While New York Gov. David Paterson called for a 3.3 percent cut in executive department budgets soon after the state adopted its 2007-2008 spending plan in April, it is clear by his comments this week, and his statewide address last night, that more needs to be done.
That will require tough choices. It is not clear if the Legislature, all up for re-election this November, will go along before Election Day.
Cosentino is a former mayor of Auburn and can be contacted at cozguytho@aol.com
The Citizens' Say
There are No comments posted.