IT'S NOT THE ECONOMY, STUPID

Bad moves, not economy, behind busted state budgets Governors, legislators failed to act quickly when boom began to fade, analysis finds (Dennis Cauchon, USA TODAY, June 23, 2003)

To make ends meet, some states have removed thousands of low-income adults from Medicaid and reduced benefits for others. Many states have raised college tuition, cigarette taxes and other narrowly targeted fees. Six states have increased sales and income tax rates, and several more might do so this week.

But one thing has remained constant throughout the crisis: State spending keeps growing.

It went up 6.3% for the fiscal year that ended June 30, 2002, and it's on track to rise about 5% in the 12 months that end June 30. The number of people on Medicaid, which pays for health care and nursing homes for the poor, remains at a near-record 40 million. That number is up 30% since 1998, the result of efforts to sign up people who qualify. And despite anecdotal reports of layoffs -- Oregon furloughed 130 state troopers, for example -- state governments have added 74,000 workers (an increase of 1.5%) in the past two years while the private sector has registered a net loss of 2.6 million jobs (a decline of 2.4%).

By almost any measure, state governments have suffered less than businesses and taxpayers during the economic downturn. Even so, nearly every state is struggling to balance its books.

And here I thought states' only problems were a slow economy and post-911 security costs.

Posted by Stephen Judd at June 23, 2003 11:29 AM