Thread: More States Face Budget Troubles From Weak Economy

More States Face Budget Troubles From Weak Economy

Thursday, June 19, 2008 10:35 AM

CHICAGO -- More U.S. states face fiscal difficulties due to a sagging economy, forcing them to cut budgets, according to a state survey released Thursday.

"As the economy has weakened, so has the state revenue and spending picture," said the semi-annual fiscal survey of states by the National Governors Association and the National Association of State Budget Officers.

"The decline of the housing sector along with a weak manufacturing sector have combined to cause significant declines in revenue for a number of states," it added.

Thirteen states were forced to reduce their budgets in fiscal 2008, compared to only three in fiscal 2007, according to the survey, while 18 states assumed shrinking budgets in fiscal 2009.

Fiscal 2008 revenue from sales, income and other taxes and fees was below expectations in 20 states, on target in 14 states and above estimates in 15 states, compared to fiscal 2007, when only eight states reported revenue not meeting projections, the survey said.

States' financial cushions, which include ending budget balances and rainy day funds, were also on the decline. The survey said fiscal 2008 balances were projected to fall to 8 percent of expenditures from 10.5 percent in fiscal 2007. For fiscal 2009, which begins July 1 in most states, balances were expected to fall further to 7.5 percent.

Meanwhile, Medicaid spending was on the rise. The health-care costs of more than 62 million low-income people, shared by the state and the federal governments, were expected to climb by 6.4 percent in fiscal 2008 and another 3.7 percent in fiscal 2009.

High energy and agricultural prices have insulated some states from budget troubles so far, as has limited exposure to declines in the housing sector, the survey said.

"Even so, most states are concerned about a continued weakening of the national economy and the impact on their individual state fiscal situations," the survey reported, adding that fiscal 2009 could be "more troublesome" for state finances than fiscal 2008.

http://moneynews.newsmax.com/economy/ec ... 05864.html

Lets sit back and see if it effects the illegal's. So far it has not. They still have the welfare benefits and health benefits