It's been 25 years since state and local governments across the United States were in such bad shape - and the budgetary pain is far from over.
The state-funding gap is growing, local governments lost 76,000 jobs last month, and property tax receipts are slated to fall for years.
"While the recession might have officially ended on the national level, cities are in the eye of the storm and the problems are intensifying," Christopher Hoene, a director at the National League of Cities, told The Financial Times.
A study released last week showed that big U.S. cities could face a painful financial squeeze: Their pension plans are under-funded to the tune of $547 billion.
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Question of the Week: Investors Prepare for State and Local Governments' Tight Budgets
We Want to Hear From You: Are You Vulnerable to the Budgetary Woes of Your State and Local Governments?
It's been 25 years since state and local governments across the United States were in such bad shape - and the budgetary pain is far from over.
The state-funding gap is growing, local governments lost 76,000 jobs last month, and property tax receipts are slated to fall for years.
"While the recession might have officially ended on the national level, cities are in the eye of the storm and the problems are intensifying," Christopher Hoene, a director at the National League of Cities, told The Financial Times.
A study released this week showed that big U.S. cities could face a painful financial squeeze: Their pension plans are under-funded to the tune of $547 billion.
The state-funding gap is growing, local governments lost 76,000 jobs last month, and property tax receipts are slated to fall for years.
"While the recession might have officially ended on the national level, cities are in the eye of the storm and the problems are intensifying," Christopher Hoene, a director at the National League of Cities, told The Financial Times.
A study released this week showed that big U.S. cities could face a painful financial squeeze: Their pension plans are under-funded to the tune of $547 billion.
State Budget Crises Threaten U.S. Economic Recovery
Across the country state budget crises are threatening to undermine the U.S. economic recovery.
Some 48 states are emerging from a round of painful budget cuts for their 2010 fiscal budgets, and at least 46 states face shortfalls for the upcoming 2011 fiscal year, which in most states began July 1.
The recession has caused the steepest decline in state tax receipts on record - and states will continue to struggle to find the revenue needed to support critical public services for a number of years as a result.
Since virtually all states are required to balance their operating budgets each year they cannot maintain services during an economic downturn by running a deficit, as the federal government does.
Some 48 states are emerging from a round of painful budget cuts for their 2010 fiscal budgets, and at least 46 states face shortfalls for the upcoming 2011 fiscal year, which in most states began July 1.
The recession has caused the steepest decline in state tax receipts on record - and states will continue to struggle to find the revenue needed to support critical public services for a number of years as a result.
Since virtually all states are required to balance their operating budgets each year they cannot maintain services during an economic downturn by running a deficit, as the federal government does.
Money Morning Mailbag: State Budgets Far From Healed After Recession
Question: Which of the states are doing best and worst?
- Kathryn
Answer: The first 9 months of 2009 handed states the biggest revenue decline in history and the bleeding hasn't stopped. The Center on Budget and Policy Priorities (CBPP) estimates state budget gaps will grow to $350 billion over the next two years, with every state in "fiscal trouble" except Montana and North Dakota. California is projected to hit $20 billion and New York $9 billion.
Obama's Budget Adds $1 Trillion in Taxes, Balloons Federal Deficit
President Barack Obama yesterday (Monday) unveiled a $3.8 trillion budget proposal that includes big tax increases on individuals and businesses, and expands the federal deficit by more than $5.5 trillion by the end of the decade, including a record $1.6 trillion next year.
The budget blueprint for the fiscal year that begins Oct. 1 reflects the administration's struggle to find a balance between containing the spiraling federal deficit with the need to boost the economy and create jobs - both of which figure to be political bombshells in the upcoming 2010 elections.
"We're trying to accomplish a soft landing in terms of our fiscal trajectory," Peter Orszag, director of the White House Office of Management and Budget, said at a press briefing.
But the budget is certain to add fuel to the debate over the size and scope of government. As expected, Republicans railed against the administration's big spending programs and tax increases.
The budget blueprint for the fiscal year that begins Oct. 1 reflects the administration's struggle to find a balance between containing the spiraling federal deficit with the need to boost the economy and create jobs - both of which figure to be political bombshells in the upcoming 2010 elections.
"We're trying to accomplish a soft landing in terms of our fiscal trajectory," Peter Orszag, director of the White House Office of Management and Budget, said at a press briefing.
But the budget is certain to add fuel to the debate over the size and scope of government. As expected, Republicans railed against the administration's big spending programs and tax increases.
Tax Break Negates U.S. Profit from Citi's TARP Repayment
The U.S. government is forfeiting billions of dollars in tax revenue collections from Citigroup Inc. (NYSE: C) that could be worth more than the profit reaped from the bank's repayment of bailout funds.
The U.S. Treasury's Internal Revenue Service (IRS) on Friday made an exception to longtime tax rules that will enable Citi to avoid taxes on its next $38 billion in profits - the value of the bank's past losses at the end of the third quarter, The Washington Post reported.
"The government is consciously forfeiting future tax revenues. It's another form of assistance, maybe not as obvious as direct assistance but certainly another form," Robert Willens, an expert on tax accounting who runs a firm of the same name told The Post . "I've been doing taxes for almost 40 years, and I've never seen anything like this, where the IRS and Treasury acted unilaterally on so many fronts."
The U.S. Treasury's Internal Revenue Service (IRS) on Friday made an exception to longtime tax rules that will enable Citi to avoid taxes on its next $38 billion in profits - the value of the bank's past losses at the end of the third quarter, The Washington Post reported.
"The government is consciously forfeiting future tax revenues. It's another form of assistance, maybe not as obvious as direct assistance but certainly another form," Robert Willens, an expert on tax accounting who runs a firm of the same name told The Post . "I've been doing taxes for almost 40 years, and I've never seen anything like this, where the IRS and Treasury acted unilaterally on so many fronts."