Monday, April 11, 2011

Closing State Deficits

All of the 48 states that have released budget proposals for fiscal year 2012 have proposed deep cuts. In light of that, it is important for policymakers at the state level to consider what additional or alternative measures are available to close state deficits. The Center on Budget and Policy Priorities report, A Balanced Approach to Closing State Deficits, suggests that states that rely solely or primarily on budget cuts to close deficits are hurting residents and businesses that need immediate assistance and are also reducing demand in the economy and impeding their state’s economic recovery. The report suggests using a more balanced approach to closing deficits that includes:

  • Efficiency – focusing on the goals of expenditures and whether there are better ways to reach those goals;
  • Using all available resources – employing reserves and rainy day funds responsibly and wisely;
  • Scrutinizing all spending, not just what is appropriated through the budget – including programmatic expenditures made in the form of tax breaks;
  • Improved collections – aggressively seeking taxes due that are not being paid;
  • Tax increases – particularly those that have a more positive impact on the economy than spending cuts;
  • Prioritization – making careful decisions based on goals and effectiveness when budgets must be cut; and
  • Paying close attention to future impact while fixing today’s problems.

For more information on ways that states can protect the most vulnerable families in their states, while maximizing their return on investment and stimulating their economy visit CSSP’s new policy briefs page, which includes briefs on policy topics ranging from effective government to improving grade level reading.