Last Updated:September 1 @ 08:10 am

US states' financial woes likely to erode services

By Christopher S, Rugaber

WASHINGTON (AP) - U.S. states face long-term budget burdens that are already limiting their ability to pay for basic services such as police, local schools and transportation, a report says.

Aging populations and rising health care costs are inflating Medicaid and pension expenses. At the same time, revenue from sales and gas taxes is shrinking. And grants from the federal government, which account for about one-third of state revenue, are likely to shrink.

Those challenges are made worse by a lack of planning by many states and the repeated use of one-time accounting gimmicks to cut costs, the report says.

The report was issued by the State Budget Crisis Task Force, a non-profit group co-chaired by former Federal Reserve Chairman Paul Volcker and former New York Lieutenant Governor Richard Ravitch.

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4 Comments

  1. joelinpdxComment by joelinpdx
    July 17, 2012 @ 3:01 pm

    America is suffering from trying to be all things to all people. We keep trying to give people everything they need to the point that we are running out of money. As Mrs. Thatcher said, “The problem with socialism is that eventually you run out of other peoples money.”

    Now we have Obozo who keeps giving people more and more. Obozocare. Food stamps. 99 weeks of unemployment compensation. California and Illinois are on the verge of bankruptcy. Soon it will be the whole country that declares it is bankrupt.

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  2. tomadsComment by tomads
    July 17, 2012 @ 7:56 pm

    Let’s see.

    The help lies to get huge salary and benefit increases when times are easy and then refuses to cut back when times are tough.

    They have priced themselves out of the market and punish us with reduced services…

    If we don’t fire them NOW, we are in a bigger mess…

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    Rating: 4.8/5 (6 votes cast)
  3. TaquoshiComment by Taquoshi
    July 17, 2012 @ 8:31 pm

    In my state, one problem is that there are hundreds, literally hundreds, of unfunded mandates coming from our state capital regarding education. And it isn’t just benefits and salaries, pensions and overtime driving the cost up, it’s also special education demands. Our city’s teachers are the second highest paid in my state and they refused to agree to a salary freeze, so dozens of teaching jobs were cut. Now, everyone is running around screaming, “You don’t care about the kids.” Oh? Then why is the lion’s share of the entire city’s revenue dedicated to education?

    Secondly, the Federal Government changed how pensions would be handled. It’s called GASB and I have a very slippery grasp on what it means. But suffice it to say, the municipalities are now required to put the pension costs aside for the workers right now, rather than the previous pay as you go system.

    Investment returns are down. That took a big chunk of revenue out of our budget.

    And the more the government (Federal,state and local) keeps churning out more laws, the harder it will be. A number of towns including mine, decided that from now on, local contractors should be chosen to perform projects. Sounds good until you realize that the smaller outfits aren’t eligible for the bonding process and even when they are, the smaller contractors can’t be bothered with all the paperwork and hoops they have to jump through. To them, time is money and they lose money just trying to fill out the paperwork.

    Another boon doggle was the local workers hiring initative. When a contractor bids on a job, they have to agree to hire so many local residents. That messes up union shops, since their membership is pretty much determined, and non union shops usually have their crews trained and ready to go. So, if Joe, who is an electrician, is out sick or can’t participate in the project for whatever reason, the cities and towns want the contractor to hire someone local. Well, if the local person does a lousy job and there are problems later, whose going to eat those costs and have damage to their reputation?

    So there are alot of moving parts to this problem. And yes, our services are decreasing. And the people who are hurt the most by that are the ones who are the most vulnerable.

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  4. joereinhartComment by joereinhart
    July 18, 2012 @ 4:23 am

    Yes, liberal politics. It’s all fun and games until someone looses an eye.

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    Rating: 5.0/5 (3 votes cast)

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