Tax Measures Help Balance State Budgets

Source: Nicholas Johnson, Andrew Nicholas and Steven Pennington, Center on Budget and Policy Priorities, May 13, 2009

The current recession has taken a heavy toll on states’ ability to meet public needs. The combination of declining revenues and increasing demand for services has created budget shortfalls in 47 states.

To begin closing the gaps between the cost of programs and the amount of money available to pay for them, so far at least 34 states have cut services to families and individuals, including services that benefit vulnerable families. But these cuts have not solved state budget problems, because the sheer size of state budget shortfalls is so great – estimated to exceed $350 billion over the next two and a half years. Were states to rely on spending cuts alone to close their gaps, it would require unprecedented reductions in such essential public services as health care, education, and assistance for the elderly and disabled.

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