13 States Face Total Budget Shortfall of at Least $23 Billion in 2009; 11 Others Expect Budget Problems: Economy, States’ Past Fiscal Decisions Are Largely To Blame

Publication Date: December 2007

Publisher: Center on Budget and Policy Priorities (Washington, D.C.)

Author(s): Elizabeth C. McNichol; Iris J. Lav

Research Area: Economics; Government

Keywords: Economic projections; State budgets; Recession; Tax code

Type: Report

Abstract:

Thirteen states, including several of the nation’s largest, face a combined budget shortfall of at least $23 billion for fiscal 2009. Another 11 states expect budget problems next year or the year after. The initial reports for 2009, which runs from June 2008 to June 2009 for most states, suggest states are returning to a time of budget deficits. Some of the fiscal problems are due to economic conditions outside states’ control. The bursting of the housing bubble has reduced state sales tax revenue collections from sales of furniture, appliances, construction materials, and the like. Property tax revenues have also been affected, and local governments will be looking to states to help address the squeeze on local and education budgets.