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Report: Nearly Half of States Face Shortfalls Amid Downturn

As the banks go national and Wall Street goes loco, states are increasingly feeling the pain of the economic turmoil. Twenty-one states and the District of

Jul 31, 2020
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As the banks go national and Wall Street goes loco, states are increasingly feeling the pain of the economic turmoil.
Twenty-one states and the District of Columbia now face budget shortfalls totaling $8.9 billion this fiscal year, according to an analysisreleased this month by the Center on Budget and Policy Priorities, a liberal policy watchdog.
The financial crisis has been particularly tough on states, for at least two reasons.
First, consumers are spending less, and that means sales-tax revenues are falling at the same time that demand for social services like unemployment benefits, food aid and Medicaid is rising.
Second, unlike the federal government, states (generally) are required by law to balance their annual budgets.
And here’s a hint: It’s not the wealthy folks who usually feel the pain of the squeeze.
This fiscal year, 22 states have already made or proposed cuts to programs benefiting some of their most vulnerable residents, CBPP found. Some examples, according to another CBPP report:
  • 14 states have cut programs providing health-care services to low-income residents. Rhode Island, for example, eliminated care for an estimated 1,000 low-income parents.
  • 11 states have cut medical care for the elderly and disabled. Ohio, for example, has closed two mental health facilities.
  • 17 states have cut funding to public colleges and universities. Community and technical college students in Kentucky, for example, have seen average tuition hikes of 5.2 percent as a result of education cuts there.
  • 13 states have cut funding to public elementary, middle and high schools. Aid to local school districts in Florida, for example, has been cut by roughly $130 per student.
Unlike some banks, of course, the folks affected by these cuts are not too big to fail.
Camilo Wood

Camilo Wood

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Camilo Wood has over two decades of experience as a writer and journalist, specializing in finance and economics. With a degree in Economics and a background in financial research and analysis, Camilo brings a wealth of knowledge and expertise to his writing. Throughout his career, Camilo has contributed to numerous publications, covering a wide range of topics such as global economic trends, investment strategies, and market analysis. His articles are recognized for their insightful analysis and clear explanations, making complex financial concepts accessible to readers. Camilo's experience includes working in roles related to financial reporting, analysis, and commentary, allowing him to provide readers with accurate and trustworthy information. His dedication to journalistic integrity and commitment to delivering high-quality content make him a trusted voice in the fields of finance and journalism.
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