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Recession's Lasting Impact on State Governments

This report examines the current recession's impact on state governments, including revenue decreases, budget shortfalls, shrinking government, and stimulus spending. It also looks at the upcoming 2010 elections for governors, secretaries of state, and attorneys general.

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Recession's Lasting Impact on State Governments

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  1. State of the States 2010 Barbara Rosewicz Audio: 1-888-299-4099 Access Code: V082406 Stephen C. Fehr Christine Vestal Pamela M. Prah

  2. To find the report, go to: http://www.stateline.org/live/publications/States-2010

  3. State of the States 2010 Barbara Rosewicz Stephen C. Fehr Christine Vestal Pamela M. Prah

  4. By Stephen C. Fehr Recession could reshape state governments in lasting ways

  5. How this recession compares to the last one States experienced the largest revenue decreases in the months following the 2001 recession. This recession has already surpassed those declines—and revenue figures are expected to continue to take a hit.

  6. Revenue changes by state The recession came earlier to states hit hard by the collapse of the housing boom, such as Arizona and Florida, whose revenue plunged and unemployment skyrocketed. By the second quarter of 2009, however, every state was facing declines in revenue from the previous year. And the latest figures show every major source of state tax revenue—sales, corporate- and personal-income taxes—tumbled, compared with the previous year.

  7. Growing statebudget gaps The current recession already has forced states to deal with greater budget shortfalls than they faced in the five years it took them to recover from the last national recession after the 2001 terrorist attacks. As a result of the previous eight-month recession, states erased $263.8 billion in deficits from fiscal year 2002 to fiscal year 2006. Since the current recession started in December 2007, states scrambling to balance their budgets already have closed at least $304 billion in gaps between projected spending and revenue.

  8. Incredible shrinking state government • Examine the impact on state employees • Look at impact on services the state delivers • What are the long term solutions to my state’s financial troubles • Reform of the tax revenue structure • Who will pay for government in the future? • More fees, taxes, costs shifted onto residents, students • Public private relationship • Will elected officials really make changes or revert back to old ways?

  9. By Christine Vestalcvestal@pewtrusts.org Is it time for a new balance in the federal and state fiscal partnership?

  10. Projected stimulus spending Recovery dollars will peak for states in 2010 at nearly $108 billion and taper off through 2016. The package was designed so that investments in highways, high-speed rail, broadband technologies, clean water and energy efficiency would come later. Nearly half of the $23 billion in stimulus funds for states in fiscal year 2012 is for transportation, environment and energy projects.

  11. How stimulus funds are being distributed Nevada and Florida, two states hit particularly hard by the recession, have so far received fewer federal stimulus dollars per capita—less than $400—than many other states. North Dakota, one of just two states that didn’t have a budget gap, and Alaska received the most, more than $1,000 per capita.

  12. Resources • The Tax Foundation • Federal spending in each state per dollar of federal taxes (FY2005) • National Association of State Budget Officers • State Expenditure Report, Dec. 2009 • Medicaid expenditures from federal and state sources, p.47 • Medicaid spending as a percentage of total expenditures, p. 48 • Percentage change in Medicaid expenditures, p. 49 • A modest proposal to the federal government: Let Utah do it, The Washington Post, Feb. 19, 2010 • Federal Aid to States, U.S. Census Bureau, July 2009 • A Citizen's Guide to the 2009 Financial Report of the U.S. Government, U.S. Department of the Treasury, Dec. 2009

  13. By Pamela M. Prah 2010 elections: New faces, daunting problems

  14. 37 governorships up for election in 2010 Voters in 37 states will elect governors in 2010. Democrats will defend 19 of those seats and Republicans, 18. Of those 19 seats currently held by Democrats, 11 will be open because of term limits or retirements. Republicans have 11 open seats. Republicans will try to recapture the lead in governorships, capitalizing on their wins in New Jersey and Virginia in 2009. Going into the 2010 elections, Democrats control 26 governors’ seats to the GOP’s 24.

  15. 26 secretaries ofstate up forelection in 2010 Voters this fall will elect 26 secretaries of state, a post that in all but 11 states also is the top election official and often the launching pad for other offices. Vermont’s secretary of state, for example, is vying for the governorship, Connecticut’s is running for attorney general and Ohio’s is eyeing a U.S. Senate seat. In 12 states, the secretary of state is appointed and Alaska, Hawaii and Utah rely on their lieutenant governors to serve that role.

  16. 31 attorneysgeneral up forelection in 2010 Races for 31 attorneys general will be on the ballot this fall, including open seats in Arizona, California, Florida, Georgia, Michigan, Oklahoma, Rhode Island and South Carolina, where incumbents all expressed interest in governorships. Insiders continue to speculate on whether New York Attorney General Andrew Cuomo might jump into a Democratic primary race against embattled Gov. David Paterson. Democrats will be defending nearly twice the number of seats (20) than Republicans (11).

  17. Battlefront for legislative chambers • Both chambers are in play in Alaska, Montana, Tennessee and Wisconsin. • Other Senate chambers to watch: Kentucky, Maine, Nevada, New Hampshire, New York, North Dakota, Oklahoma and Oregon. • House chambers to watch Delaware, Indiana, Ohio, Pennsylvania and Texas Currently Democrats control both chambers in 27 statehouses, the GOP has majorities in both chambers in 14 states. Eight statehouses are split. (Nebraska is the only nonpartisan unicameral legislature).

  18. Running for redistricting power • All eyes are on Texas, which is likely to be awarded up to four extra seats in Congress, more than any state. • Legislatures also will play a primary role in redrawing districts in states expected to pick up one seat in Congress: Florida, Georgia, Nevada, North Carolina, Oregon, South Carolina and Utah. • Arizona could pick up two congressional seats, but its map is drawn by an independent commission.

  19. States where statehouse term limits will apply in 2010 • Arizona • Arkansas • California • Colorado • Florida • Maine • Michigan • Missouri • Montana • Nebraska • Nevada • Ohio • Oklahoma • South Dakota

  20. AGs looking at the governorship • Arizona • California • Florida • Georgia • Michigan • New York • Oklahoma • Pennsylvania • Rhode Island • South Carolina

  21. State of the States 2010 Barbara Rosewicz Brosewicz@pewtrusts.org Stephen C. Fehr sfehr@pewtrusts.org Christine Vestal cvestal@pewtrusts.org Pamela M. Prah pprah@pewtrusts.org

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