States battle ongoing recessionary conditions (and can not print their own currency)

Associate Press
"The worst probably is yet to come," warned Gov. Jim Douglas, R-Vt., chairman of the National Governors Association, at the group's meeting Saturday. He called the situation "fairly poor" in most states, adding that it "doesn't look too good.

“Because of the decline in state revenues,” Mr. Douglas said, “43 states cut $31 billion from their budgets in 2009. For fiscal year 2010, even with nearly $30 billion in new revenue, 36 states have been forced to cut $55 billion. Thirty states have cut elementary, secondary and higher education.”

Such uncertainty weighed heavily over the governors' weekend meeting even though health care -- and how states can address skyrocketing costs -- was their intended focus. That's recognized as one of the biggest issues affecting states' long-term solvency.

States face budget holes totaling $134 billion over the next three years, according to the governors, explaining that tax collections keep declining as Medicaid costs soar. High unemployment persists. States cut 18,000 jobs in January alone and more job losses are anticipated. Because states are required to balance their budgets, shortfalls will be made up by raising taxes or fees or cutting services.

While the national economy has grown in recent months, the situation is deteriorating in the states. People are feeling the fallout daily, from fewer services to higher fees. It's a trend consistent with other recessions; states usually experience their worst budget years in the two years after a recession ends.

Governors are hoping for an infusion of cash, perhaps $25 billion, in the latest jobs measure that Congress is debating. The national unemployment rate fell to 9.7 percent in January, but 17 states entered 2010 with double-digit joblessness.

In the coming year, state tax collections are projected to continue to be far lower than expected because real estate values are plunging, people are losing their jobs and consumers are curtailing spending. Demand for services such as Medicaid, food stamps and unemployment benefits is all but certain to keep rising.

People fretting about disappearing jobs and drying up unemployment benefits will feel the effects of whatever governors decide to do. Tough budget times typically translate into new tolls on roads, more prisoners released early to save money, the end of some state welfare programs and steeper tuition at public colleges.

"The governors who raise taxes will be hurt worse than the governors who have cut spending," predicted Mississippi Gov. Haley Barbour, chairman of the Republican Governors Association. He said people tend to give leaders credit who make tough choices to tighten their own belts in times of crisis.

Grandpa’s take:
The administration continues to spew the “economic improvement story” however 36 of our 50 states have cut $55 billion from their budgets and cut elementary, secondary and higher education! Is the administration suggesting that the remaining 14 states have adequate growth to make up for the remaining 36? Clearly the private sector is not making up the difference!
 
States cut 18,000 jobs in January and yet Mr. Joe “jolly” Biden states 2,000,000 jobs have been saved or created as a result of the stimulus package.
 
Christina Romer, Chair of the Council of Economic Advisors in a 458 page report to Obama declares the U.S. will average +95,000 jobs per month throughout 2010. This is the same Ms. Romer that in last year’s report stated unemployment would be slightly higher than 8% in 2009. The “official” government calculated (a.k.a massaged, tweaked and adjusted years later) unemployment figure hit 8.9% in March of 2009 and spent the balance of the year between 9.5% and 10%. OOPS!
 
Christina recently told reporters at the White house: “The truth is, we don’t have a crystal ball. Every year, we try to do an honest, reasonable, conservative forecast.”
 
The truth is Ms. Romer, you and your three person team are clearly over your heads and forget that mathematical calculations are a left brain function versus the right brain political spew you do so well. Maybe if you and Austan Goolsbee spent less time on CNBC and Fox News, you would have adequate time to substantiate your calculations.