In addition to the National Priorities Project’s handy “State of the States” reports announced in the last Watcher, there is also a new set of fact sheets from AFSCME documenting the draconian cuts states have been forced to make to contend with their 3-year cumulative budget gap of $189 billion. A one-page fact sheet looks comprehensively at the cuts used by many states to meet their own constitutions’ mandates of a balanced budget. Some of the cuts recently used by states include releasing prisoners before completion of their sentences, cuts to higher education, increases in tuition at state universities, reducing funds for community services and child support enforcement, tightening eligibility requirements for the working poor and disabled for state Medicaid health plans, raiding state rainy day funds, and layoffs. Other state-by-state analyses will be available soon, which OMB Watch will note.

Local news and national papers alike have been replete with the troubling real results of the growing state budget shortfalls. These stories have broken down the astounding figures – $65 billion and $70-$85 billion budget gaps in FY 2003 and FY 2004, respectively – into their real, daily effects on ordinary citizens. By now, Kentucky’s decision to release prisoners before their sentences were up has become the poster-child for desperate states and their drastic budget-balancing measures. In other similar high-profile cost-saving efforts, some school districts in Oregon and Colorado have turned to a 4-day school week; others have stopped buying new textbooks; still others have cut school athletic and marching band programs; in some districts in Oklahoma, the schools have stopped hiring substitute teachers and are, instead, looking to parents to fill in for teachers. According to the International Association of Firefighters, the state and local budget gaps have resulted in layoffs, station closings, and other reductions in staff, even as new Homeland Security Secretary Tom Ridge calls on local contributions for domestic security.

With the shake-up in the Administration’s economic team, the recent rise in the unemployment rate to 6% (the highest rate in eight years), and absolutely no evidence that the massive Bush tax cut has done anything but send the federal budget on a rapid spiral into deficit, a reasonable person might think that it was time for the Administration to reevaluate the idea that tax cuts are the solution to everything. The President’s economic stimulus plan, currently in the design phase, however, is expected to consist of tax cuts aimed at corporations and individuals in the higher tax brackets.

Last Monday, July 1, marked the start of a new fiscal year for most states, many of which had to resolve large deficits after years of "April Surprises" -- the affectionate name given to the larger-than-expected influx of state income tax revenue each April 15.