Budget Cuts and IOUs: What’s Squeezing the States?

Source: Sam Pizzigati, Working Group on Extreme Inequality, July 6, 2009

On July 1 last week, in state capitals across the United States, a new fiscal year began — amid nearly unprecedented fiscal chaos. In California, officials closed summer schools and made plans to pay bills with IOUs. In Arizona, state parks shut down for a day. In Illinois, drug treatment programs, facing a 72 percent funding cutback, were warning they may have to stop accepting new clients.

Overall, so far this year, 23 states have slashed programs for the elderly and disabled, 24 have axed aid to public schools, and 41 have sliced state worker jobs and benefits. And tens of billions in red ink still remain.

How could state budgets possibly spin so wildly out of kilter?

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