States Continue to Feel Recession’s Impact

A new report from the Center on Budget and Policy Priorities (CBPP) has updated data about the impact of the continued struggling economy on state budgets. According to CBPP's latest analysis, 44 states and the District of Columbia are projecting budget shortfalls totaling $112 billion for fiscal year 2012, which for most states begins on July 1, 2011.

These figures are down slightly from previous years, both in terms of the number of states reporting shortfalls and the total deficit figures. According to CBPP, annual cumulative state shortfall totals were $110 billion in FY2009 (45 states and the District of Columbia), $191 billion in FY2010 (48 states and D.C.), and a projected $130 billion in FY2011 (46 states and D.C.) The FY2011 total includes $7.8 billion in mid-year deficits reported by 13 states and the District of Columbia since they adopted their 2011 budgets.

Yet while the national economy is showing some signs of recovery, CBPP estimates that FY2012 will be at least as tough on the states as previous years, if not more so. This is due to the fact that most states have already made significant cuts in previous years, eliminating the "low-hanging fruit" from their budgets. In addition, federal stimulus money from the 2009 American Recovery and Reinvestment Act, which eased the impact of low state revenues in previous years, has virtually dried up, dropping from almost $60 billion in FY2011, to $6 billion in FY2012.

The states which have not projected deficits for FY2012 are Alaska, Arkansas, Montana, North Dakota, West Virginia and Wyoming. Only two states – Montana and North Dakota – have not experienced budget shortfalls in any of these years.  Two other states – Alaska and Arkansas – experienced shortfalls in FY2010 but have not projected deficits in subsequent years.

Meanwhile, according to CBPP, 26 states are already projecting shortfalls totaling $75 billion for fiscal year 2013.

Federal Aid to States

While the 2009 stimulus package was Washington’s emergency response to the nation’s economic woes, each year the federal government also provides hundreds of billions of dollars to states through grants and assistance programs. Many of these programs are critical to states and their citizens, particularly as the current difficult economic climate is forcing states to make tough budget choices.

Based on the FY2012 budget request released by the Obama administration on February 14, NPP has created data tables for a number of federal programs and grants for states for fiscal years 2010-2012. The materials can be accessed in one of two ways. You can see state level data for each of the programs available, or you can see the funding for every program for each state.