Strained states to make cuts everyone will feel
With a new fiscal year beginning in most states next week, budget cuts are about to bite.
That means less money for schoolchildren in Florida, the end of help with utility bills for poor Rhode Islanders and a good chance tuition will increase at Auburn University in Alabama.
"Everything is rising and you have to wonder -- when is it going to stop?" said Lauren Hayes, an Auburn senior. She's expecting a tuition increase, after state lawmakers reduced higher education funding by $157 million and the university responded by proposing a $660 increase for in-state students.
Overall, the state fiscal picture is gloomy and the pain from reductions -- many of which take effect July 1 -- will be widespread:
* In Florida, basic spending on schoolchildren will drop by $131 per student. And bonuses for schools that earn top grades from the state will shrink to $85 per student from $100.
* In California, with the nation's biggest anticipated deficit at $17 billion, Gov. Arnold Schwarzenegger has proposed deep cuts in Medi-Cal, the state's health insurance program for poor families and children.
* In New Jersey, lawmakers have proposed eliminating free state police patrols for rural communities that lack police departments. Under the plan, those communities would pay a combined $12 million for the service, the first time they're being charged a fee.
The fee doesn't sit well in Shamong Township, a 46-square-mile municipality with a budget of less than $3 million and several state-owned properties, including a park and state forest.
"The state really is our biggest resident, and now they're going to charge us to police themselves," township administrator Sue Onorato said.
A midyear survey of state finances by the nation's state budget officers showed state spending nationally will grow by just 1 percent in the new fiscal year. That's down from average growth of 6.7 percent over the last three decades.
The survey also found that 18 states reported their upcoming budgets will be smaller than spending plans for the current year.
If all the states cut budgets or raise taxes to get out of the red, it will be the equivalent of pulling about $35 billion out of the national economy, said Ray Scheppach, executive director of the National Governors Association.
Cities are feeling the pinch, too. The U.S. Conference of Mayors reports that growth in the nation's 360 metro economies has slowed to 1.4 percent this calendar year and will rise to just 1.5 percent next year. That's about half the growth rate of recent years.
Economists say it all adds up to a much bigger problem than just the loss of student funding here or free police service there. State and local government purchasing in the first three months of this year alone was about $1.8 trillion, considerably above federal purchases of $1.02 trillion.
If states and cities keep trimming, it affects the whole country.
"State and local governments are not going to be in any vanguard to pull the economy out of its lethargy," said Ken Mayland of Cleveland-based ClearView Economics.
In Rhode Island, Gov. Don Carcieri on Friday signed a $6.9 billion budget that makes deep cuts to social welfare spending and repeals an energy assistance program for the poor.
"It's a disaster, it's unbelievable," said Henry Shelton, coordinator of the George Wiley Center, which lobbies on behalf of poor families. "They're balancing it on the backs of the people least able to afford it." Carcieri defended the budget as a turning point in the state's economic problems.
"In the face of a severe fiscal crisis, we have worked together to reduce spending and balance the budget without raising taxes," he said in a statement.
In Tennessee, the state wasn't able to pour an extra $100 million into school funding that was anticipated as part of an overhaul of how
Tennessee pays for education. For Murfreesboro City Schools, that means delaying a plan to hire more teachers to keep the pupil-teacher ratio low at the pre-K through sixth-grade district. "It is what it is facing the hard cruel facts that the economy is not doing as well," said district finance director Gary Anderson. "It just means we've got to evaluate everything."