State budgets unlikely to recover until 'late in the next decade,' governors say

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Gov. Jim Douglas (R) is the 2009-2010 chair of the National Governors Association.
Gov. Jim Douglas (R) is the 2009-2010 chair of the National Governors Association.

The recession has seriously bruised states over the last year and they will continue to face fiscal difficulties, according to reports released last week by the National Governors Association and the National Association of State Budget Officers.

Despite massive spending cuts in fiscal year 2009, states are still facing roughly $14.5 billion in budget deficits for fiscal year 2010, according to the NGA and NASBO reports. Predictions indicate that shortfalls will approach $21.9 billion for fiscal year 2011. Meanwhile, increased Medicaid enrollment due to recessionary job losses and anticipated expansion under healthcare reform has caused Medicaid spending to increase. Spending in FY 2010 is expected to grow by 6.6%, the reports say. States have cut spending on nursing home and home- and community-based care services to overcome budget shortfalls.

The length and depth of the economic downturn, coupled with increasing Medicaid enrollment and severe budget cuts suggests states will be struggling to recover financially for at least the next 10 years, NGA officials said in a release accompanying the reports.

“The bottom line is that states will not fully recover from this recession until late in the next decade," NGA Executive Director Raymond C. Scheppach said.

More information is available at www.nga.org.