LANSING – Despite hopes that the national economy is beginning to turn around, states anticipate total budget gaps of nearly $54 billion that will have to be closed in the 2010-11 fiscal year, according to a survey released by the National Governors Association and the National Association of State Budget Officers.
That will come after the states have struggled to close more than $80 billion in gaps for the current fiscal year, and still have some $18.8 billion in budget gaps to close, the survey said. States also worry that they could see budget gaps of as much as $61.6 billion with the 2011-12 fiscal year.
Most states’ fiscal years begin July 1 (Michigan’s begins on October 1), so with those that have budget gaps remaining, such as Nevada, the time is running short to close their deficits.
And while the states have so far enacted a cumulative total of more than $30 billion in new tax increases, they have had to cut more than $30 billion from the budgets.
The survey was based on information from 45 states, so officials with both organizations said the results were not comprehensive.
The paper acknowledged that it appears the national recession that began in December 2007 has ended, though employment remains a struggle for many people. But so far the states are following the same pattern out of the recession that they saw in previous recessions.
It typically takes the states several years to recoup in terms of revenues and budgets following a recession, the study said.
“State revenues are continuing to deteriorate, as most states are witnessing actual monthly totals lower than their recent forecasts, which have been revised downward,” the study said.
And even with the cuts in spending and increases in revenues, the states continue to face a major driver of costs: increasing Medicaid roles. The study said Medicaid caseloads increased by 5.4 percent in 2008-09 and is anticipated to grow by 6.6 percent in 2009-10.
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