Grim Fiscal Picture of States and Localities Being Assessed
By mid-summer, with most state legislatures having adjourned, state and local government interest groups had a chance to reflect on how governing bodies were handling one of the most difficult fiscal crises in decades.
Home builders associations have been watching their state legislatures especially closely this year, fearing that new residential construction could become an especially tempting target for states and municipalities wrestling with massive budget deficits.
Of the states that had completed their budgets, the National Conference of State Legislatures (NCLS) and the American Legislative Exchange Council (ALEC), reported that:
- Twenty states raised taxes by $13.1 billion.
- Thirty-one states cut spending, although overall spending was still increasing. While states cut more than $8 billion from fiscal 2003 budgets this year, total spending will increase by more than $11 billion.
- Twenty-nine states tapped a variety of state funds. Total state borrowing in fiscal 2002 — including general obligation, special revenue and tobacco settlement bonding — was $30.2 billion. That increased to nearly $68 billion in fiscal 2003.
- Twenty-three states reduced their workforces or took other actions affecting state employees.
- Thirteen states decided to make withdrawals from rainy-day funds.
- Eleven delayed capital projects or shifted them from pay-as-you-go-projects to debt.