Cost shifting – local to state to federal –then complain

“States seek financial help as new fiscal year begins

By Michael A. Fletcher

Washington Post Staff Writer
Thursday, July 1, 2010

State governments desperately need money. Congress is in no mood to spend it. And the reckoning will begin Thursday, when the new fiscal year will start for most states.

Nothing less than the nation's nascent economic recovery hangs in the balance. States say that if they do not find financial rescue they will have to cut services and workers. That would deliver a potentially crippling blow to the economy, which needs higher employment levels to fatten wallets, promote spending, bolster tax revenue and reduce dependence on expensive social services.

States face a combined deficit of $89 billion in the fiscal year that begins Thursday, according to the National Conference of State Legislatures. And because every state but Vermont is required to balance its budget, the only recourse is cutting employees or vital programs, including education spending, medical services, programs for the disabled and elderly, and police and fire protection.

All that cutting could mean the loss of 900,000 jobs -- in the public sector and in private companies that rely on state business, according to the Center on Budget and Policy Priorities, a liberal research group.

President Obama has called for $50 billion in aid for states, but concern about the federal deficit has made lawmakers wary about significant new spending.

"We may be looking at a culture and lifestyle around this country that will start to remind people of the Depression, not a recession, if we cut through these budgets much more," said New York Gov. David A. Paterson (D), who was among a small group of state chief executives who descended on Congress on Wednesday to make a last-ditch plea for federal help.”