RSSState Budgets Will Negatively Impact Local Economies
By Jim Welsh | November 21, 2008 | 1:01 PM | 0 Comments
According to the Center for Budget and Policy Priorities, a liberal think tank, states will face a total budget gap of $100 billion by 2010, or about 15% of their budgets. California, due to falling home values, and New York, because of its reliance on financial services, are facing the largest short falls.
In California, republican Governor Schwarzenegger has proposed a 1.5% increase in the sales tax. In New York, democratic Governor Patterson has proposed cuts in Medicaid and education. He has said, "The higher we tax even the wealthy, the more we lose population and less job creation there is."
As states deal with their budget shortfalls, they will be forced to raise taxes and fees, which will hurt local economies. They will also be forced to cut services, which will lead to marches on state capitals in the next two years, as citizens demand government do more to help them. After almost 25 years of uninterrupted economic growth, this recession is going to feel like a depression.
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