February 21st, 2010
08:30 AM ET
4 years ago

Report: State economies not seen worst of recession

Washington (CNN) - Although the national economy has reported growth, revenues at the state level continue to deteriorate, and state economies have not seen the worst yet, the governors' association said Saturday.

The National Governors Association released a report Saturday on states' fiscal situation, as the group's conference in Washington began.

"States foresee fiscal year 2011, which starts for most states July 1, 2010, to be the most difficult to date, and few see fiscal year 2012 much better," the report said.

"Unlike the national economy, which witnessed significant growth in the fourth quarter of 2009 ... state fiscal conditions have continued to worsen."

States face combined remaining budget gaps of $134 billion over the next three years, the report said.

It said there has been no leveling of state revenues and most states are seeing monthly totals that are lower than recent forecasts.

Citing the Rockefeller Institute of Government, the report said that state tax collections have declined for four consecutive quarters, beginning in 2009's third quarter.

Meanwhile, Medicaid costs have grown, the report said. And states continue to lose jobs. In January alone, states eliminated 18,000 jobs, and will continue to shed jobs, the report said.

Because states are required to balance their budgets, they will "continue to cut spending and increase taxes, which will also weaken the economy and, thus, its ability to generate private sector jobs," it said.

Governors said the deficits are forcing them to make tough decisions. "Almost all governors ... are facing budget deficits," Minnesota Gov. Tim Pawlenty said.

"The key to all of this is to get the economy moving and get jobs growing again. That's where we need to have our focus."


Filed under: Economy
soundoff (2 Responses)
  1. leftisloony

    and the states in the worst shape?.....California, NY, NJ, Illinois......what a surprise........the liberal socialist progressive states with huge governments and entitlement programs, states dominated by unions and characterized by high taxes and out of control spending......while the rest of America looks at the recent losses in their IRA's and 401K's and starts to adjust their outlook ( ie, maybe i'll have to save more, spend less, and work longer....hmm, there's a concept).......the government in california declares a 40 BILLION dollar shortfall in the state's pension fund because of investment losses and this needs to be corrected ( TAXES?) so that all retirees can continue to collect pensions at 90% of their salaries and free health care.......its no surprise then that obama, strolls in from Chicago, ILL with the same mentality, and it has taken him less than a year to bring our entire nation to the brink of bankruptcy.............the 2010 elections can't come soon enough but by then it might be too late.......have a nice day

    February 21, 2010 10:29 am at 10:29 am |
  2. j

    With California's joke of a governor, it's no wonder the state's in such trouble. I hope once the current governor is voted out and we have a chance to get a real leader, someone who can and will work with the legislature, that California will see things improve.

    VOTE PROGRESSIVE 2010!

    February 21, 2010 10:46 am at 10:46 am |