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State aid bill raises budget concerns

Nancy Marshall-Genzer Aug 5, 2010

State aid bill raises budget concerns

Nancy Marshall-Genzer Aug 5, 2010


Kai Ryssdal: The money the Senate approved this morning — the House is going to vote next week — is going to help states pay for Medicaid and avoid teacher layoffs and a whole bunch of other stuff. But getting it past the Senate was no small fight. Which makes you wonder what happens when the well runs dry.

Marketplace’s Nancy Marshall Genzer has more.

Nancy Marshall Genzer:Many states are having trouble balancing their budgets. Unemployment is high and state payroll taxes are down. Sales tax revenues are also off. So, the states turned to Congress.

MARK CALABRIA: It’s really just trying to put off the inevitable.

Mark Calabria is an economist at the libertarian Cato Institute. He says state budgets became bloated during the good times. And they need to be trimmed now.

CALABRIA: If you cut out the actual fat and you actually restructure in a way, most essential services can continue to be provided.

But states have already made cuts. Some have laid off teachers. Others shaved days off the school year.

Brian Sigritz is with the National Association of State Budget Officers. He says the federal money isn’t fostering procrastination. It’s just giving states more time to shrink future budgets.

BRIAN SIGRITZ: This money is a tremendous help in that it will allow them to focus on fiscal 2012 and it will allow them to get through this year without having to make very drastic cuts.

Meantime, voters are sending a mixed message. A majority of those surveyed recently by the Pew Research Center said let the states fix their own budget problems. But more than 70 percent said those cuts shouldn’t come in education or public safety. And 58 percent said, don’t raise my state taxes.

Susan Urahn is Pew’s managing director.

SUSAN URAHN: The public’s kind of got to come to terms with what it really costs to provide the services that they want, and are they willing to pay for them.

If not, don’t look to the feds for help. Some members of Congress say this is the last cash infusion states can expect.

In Washington, I’m Nancy Marshall Genzer for Marketplace.

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