03/31/2011 - The year began with 28 newly elected governors and hundreds of first-time state and federal legislators preparing to take office. The problems they face, however, are anything but new.
With 14 million Americans still out of work, national economic growth will be too meager to generate widespread relief anytime soon. States will confront a combined budget shortfall of at least $82 billion for fiscal year 2012, following four years of budget gaps totaling $415 billion. Closing those holes will be especially challenging. Revenue collections have begun to tick upward in some states, but nationwide they are not expected to return to pre-recession levels until at least 2014. States have already made significant cuts, the largest decline in spending in the past three decades. Federal stimulus funding provided some relief, but those funds are ending and are unlikely to be renewed.
Policy makers understand that choices once deemed politically unthinkable have become fiscally unavoidable. They now face the crucial task of reconciling daunting fiscal realities with the sometimes conflicting demands of their constituents, many of whom have lost trust in government.
Americans, for example, overwhelmingly prefer that budgets be balanced with spending cuts, rather than tax increases or borrowing, according to polls conducted last year in five fiscally stressed states by Pew and the Public Policy Institute of California. Yet, most respondents also were concerned about the effects of these cuts. They want to preserve funding for K-12 education and health and human services, to the point that they express a willingness to pay higher taxes to do so. In reality, the size of many budget shortfalls makes fully protecting these areas—the biggest recipients of state dollars—extremely difficult.
As the nation braced for similarly hard choices in the 1940s, Joseph N. Pew Jr. noted that “America is searching for a better life, not an easier life.” Painless solutions to our challenges were not found then and are not at hand today. To regain our economic footing, state and federal leaders must get beyond the one-time budget fixes of recent years and make tough, data-driven decisions about taxes, spending and borrowing.
The Pew Center on the States is a source of facts and tools to help state and federal officials assess policy options and their effects on the governments’ ledger books. Our analysis and advocacy—carried out by more than 150 researchers, journalists and campaign strategists—focus attention on proven policies in a time of limited resources. These solutions help government work more efficiently and effectively, achieve long-term fiscal health through budget discipline and make smart investments in programs that provide the strongest returns.
The progress we made in 2010 underscores how Pew’s independence and nonpartisan outlook allow us to find and advance bipartisan solutions, even in the midst of a heated election season.
With its report The Trillion Dollar Gap, Pew called attention to the mounting costs of states’ public-employee retirement obligations, which increasingly crowd out other important spending priorities. The 50-state analysis detailed the huge gulf between the $3.35 trillion in benefits states have promised their workers and the $2.35 trillion set aside to pay these bills. Over a dozen states made substantial changes to rein in retirement plan costs in the wake of these findings.
In The Cost of Delay, Pew documented how states’ failure to enact effective dental policies means 17 million low-income children go without dental care each year, creating health, education and employment problems with large price tags. Six states adopted a key policy recommendation in the report, revising their Medicaid rules to expand access to preventive dental treatments for young patients.
Pew’s Pre-K Now campaign collaborated with lawmakers and advocates to advance high-quality, voluntary prekindergarten, helping secure a slight increase in overall funding for the sixth straight year. Even in these austere times, total pre-k investments for all states came in at $5.4 billion.
In Congress, Pew helped forge the consensus on financial reform that delivered a sweeping bill to President Obama’s desk. Our work shaped the legislation by arguing that any real reform had to create an early warning system to detect signs of trouble; end the notion that some financial institutions are too big to fail and stop bailouts that put taxpayers at risk; increase transparency in markets; and protect consumers from harmful business practices.
These accomplishments show that policy makers can find opportunities in the current fiscal crisis to make the long-term decisions necessary to improve the federal budget process. Last November, the Peterson-Pew Commission on Budget Reform gave federal officials recommendations that would help stabilize the federal debt. The commission’s bipartisan plan proposes creating debt targets, establishing automatic triggers for deficit reduction and increasing transparency of budgetary information and procedures.
Solving national and state deficit and debt problems is going to require tough budgetary choices. But by bringing sound research, in-depth reporting and strong advocacy to the task, the Pew Center on the States illuminates the choices and helps our nation’s leaders chart a course that allows the country to thrive and prosper.
Susan K. Urahn
Managing Director, Pew Center on the States
Read more about Pew's work in Pew Prospectus 2011 (PDF).