Responding to budget woes

States across the country are feeling the pain associated with a weakening economy. And worse, some are responding with troubling budget cuts. A new analysis by the Center on Budget and Policy Priorities finds that 18 states – including Minnesota – have made or have proposed budget cuts which could harm our most vulnerable residents. Examples from the report include:

  • In Tennessee, an estimated 30,000 – 40,000 seriously ill people are expected to lose hospitalization and other needed medical services.
  • New Jersey’s governor has proposed cutting funds for charity care in hospitals by 15 percent.
  • Florida has cut aid to local school districts for the current year by $130 per pupil.
  • States making or proposing cuts in higher education funding include Alabama, Arizona, California,  Florida, Kentucky, Maine, Minnesota, Nevada, New Jersey, New York, Rhode Island, South Carolina, Tennessee and Virginia.  Large tuition increases are likely in some of these states.
  • In Kentucky, the public defender will eliminate 10% of positions and decline certain types of cases.

States have three main tools in responding to a budget shortfall: budget cuts, use of budget reserves or one-time sources, and raising revenues.

Minnesota has made heavy use of the first two options, but so far the option of raising revenues has been largely off the table. The result? Our state is likely to face an even larger revenue shortfall when the legislature reconvenes in January 2009.

Minnesota’s 2008 legislature didn’t do our state any favors by kicking the budget-deficit can down the road.  And after years of budget shortfalls and severe limits on any broad-based revenue increases, policymakers are finding it increasingly difficult to trim the budget in ways that do not significantly interfere with Minnesota’s ability to support important priorities ranging from health care for seniors to access to affordable higher education. Without additional revenues, we may be contemplating the kind of cuts happening in other states.

-Katherine Blauvelt

About Katherine Blauvelt

Katherine Blauvelt served as the Minnesota Budget Project’s policy analyst from 2007 to 2009.
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