Funding For States In Economic Recovery Package Will Close Less Than Half Of State Deficits

Source: Iris J. Lav and Nicholas Johnson, Center on Budget and Policy Priorities, February 20, 2009

The state fiscal situation is dire. Revenues are declining, and the need for services such as Medicaid is rising as people lose income and jobs. Before passage of the economic stimulus package, state deficits were projected to equal $350 billion over the next 30 months. Because nearly all states are required to balance their budgets, states have begun to cut expenditures and raise taxes — both of which create a drag on the economy
and threaten to counteract part of the intended federal economic stimulus.

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