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Balloon of Revenue Projections Popped, U.S. State Budgets Fall to Earth Jul 02
Standard & Poors, July 2002
Abstract
While the recent recession has hit a lot of Americans in their wallets, it has also hit U.S. states in their balance sheets, due to a reduction of individual income tax receipts. Forty states reported individual income taxes for the four months to April 2002, below forecasted levels. Although there have been signs of an economic recovery, it is considered shaky. Even a solid recovery will not help in the near term, as there is a lag of 12 to 18 months between economic performance and its effect on state budgets. Most estimates put the states in a combined funding deficit of $40 billion-$50 billion. Aggravating this state of affairs is a simultaneous increase in tax refund amounts. The states...
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