It is full of tales of hungry unions, hapless governors, short-term accounting tricks, and in general governments whose long-term stability depends on keeping spending under control--even as federal policy discourages them from doing so.
Debt capitals - Edward Lee Pitts, Alisa Harris, Megan Basham, William McCleery
Nearly every state has had big budget shortfalls, and they're dealing with them in different ways. In some cases, even culturally similar neighbors are taking sharply divergent paths.
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However, there is one thing Brewer, Martin, and the Goldwater Institute agree on: One of the biggest obstacles Arizona (and by extension every cash-strapped state) faces in solving budget problems is the federal government.
Though the federal healthcare bill was not signed until after Arizona's 2010-2011 budget was finalized, the new regulations it imposes will strip the state of federal healthcare funding if it attempts to carry out the Medicaid cuts outlined in the new budget. This requirement, known as "maintenance of effort," has prompted Brewer to push for Arizona to join other states in bringing a lawsuit against the federal healthcare overhaul. Martin says that the new federal legislation may make many of the state-level debates on how to cover the shortfall moot: "The healthcare mandate blows a billion-dollar hole in our budget."
Similar federal regulations are in place to deprive states of matching funds if they try to cut spending on education. The fact that the two areas covered by maintenance of effort—education and healthcare spending—also happen to be every state budget's biggest expenditures puts states even more squarely between rocks and hard places. But soon, Schlomach warns, it may not matter what the administration mandates: "Quite frankly, we're at a point where we can't afford to spend enough to get the federal money."
Failed States - Michael Flynn & Adam B. Summers
In 2002 the National Governors Association issued a press release saying the “states face the most dire fiscal situation since World War II.” In 1990 The New York Times reported that states and cities faced a “fiscal calamity.” Fire up Google, pick almost any year, and you’ll find plenty of stories about a “fiscal crisis” around the nation.
For decades statehouses have followed a predictable schedule. In good economic times, they collect a lot more tax revenue than they really need. But instead of giving the money back to taxpayers or putting it in a rainy day fund, they pretend the good times will never end. When the good times do inevitably come to a close, governors plead poverty and either ask the federal government for help or raise taxes on their beleaguered citizens. Eventually, the economy rebounds and the vicious cycle starts again.
Bankruptcy talk spreads among Calif. muni officials
Street expects more talk of municipal bankruptcy across California because local government finances are in such dire shape -- a situation underscored on Wednesday when a top finance officer for Sacramento County projected a worse-than-expected shortfall for the county of $181 million, which could force more than 1,000 layoffs from the county's payroll.
