Tuesday, February 24, 2009

What Happens When New Federal Aid to States Runs Out?

What will happen to state budgets when the new financial assistance included in the federal stimulus legislation expires? Senior Fellow Donald J. Boyd examines that question in a new Rockefeller Institute report.

“The economic and revenue picture for states is uncertain,” the new report concludes. “Under any likely scenario, however, major fiscal problems for states will return when the new aid from Washington runs out. Budget gaps in fiscal 2012 will likely rival the critical shortfalls that states faced before enactment of the new stimulus package. Cuts or reductions in growth of spending on education, health care, and other programs, and/or major tax and other revenue increases, will almost certainly be on the table once again.”

The New York Times reported last week on the Institute's new study. The Times article is available here.

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