Report: States expect Medicaid, budget hardships next year

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The national economic downturn, combined with lower tax revenues and inflationary pressures, are painting a bleak picture for state budgets next year, according to a published report.

State revenues, which help pay for the majority of nursing home residents in America, fell by more than 5% in the first quarter of 2008, compared with the first quarter of 2007, according to a state revenue analysis released Tuesday by the Nelson A. Rockefeller Institute of Government (www.rockinst.org).

It's the third straight quarterly decline and marks the lowest level of first-quarter revenues since the first part of 2003, report analysts found.

"Unlike other economic downturns, when states were hurt by faltering corporate and personal income tax revenue, problems this time appear to be led by declines in sales taxes, prompted in large part by the issues with the housing market," a New York Times analysis noted.

The report can be found at www.rockinst.org/WorkArea/showcontent.aspx?id=14784.