Budget ‘Fixes’ Run into Trouble

Unlike the federal government, almost every state is required by law to balance its budget. But that doesn’t mean state lawmakers always balance the books in the most straightforward of ways: by matching revenues with spending.

The New York Times on Sunday (Nov. 1) spotlighted an emerging problem in states’ fiscal 2010 budgets. California lawmakers, the paper reported, are “facing the implosion of expected cost savings, as lawsuits and other factors have reduced or eliminated savings that were figured into the budget passed in July.”

For example, court challenges have prevented California from transferring transportation money into the general fund and making cuts to social service programs. As a result, billions of dollars in new shortfalls already are on the horizon.

Arizona also is not realizing savings that were calculated into this year’s budget. A high-profile plan to hand control of nine of the state’s 10 prisons to the private sector, for instance, “will almost certainly not come together this fiscal year, lawmakers there say,” the Times reported.

In Illinois, borrowing is drawing criticism as a “form of financial denial for politicians, a game of kick the can in which state leaders put off making tough decisions in hopes of better times ahead,” the Chicago Tribune reported . The state has taken out short-term loans in 20 of 26 years, the paper noted.