Feb. 13—State governments are facing the third year of their worst fiscal crisis since the Great Depression, according to a new AFT report. The primary cause is President George W. Bush’s economic policies, the report says. While workers struggle to find jobs, states are slashing government programs, increasing taxes and laying off workers.
Another Long Winter: The State Fiscal Crisis in Its Third Year, released Feb. 12, details long-term damage to education, health care and public services due to states’ continuing budget deficits. The report calculates states are grappling with a $200 billion cumulative three-year budget shortfall.
States Face a Bleak Future
AFT’s findings echo those of the National Governors Association (NGA), which found state spending in the past two years has risen only 0.6 percent—the smallest increase since 1979. Fully 32 states cut spending across the board, and 16 percent laid off employees, the NGA reported in its December 2003 Fiscal Survey of States.
“While some states have done marginally better recently, the majority face a bleak future because many of the losses are permanent,” says AFT President Sandra Feldman.
“Most of the responsibility for this problem can be placed squarely at the feet of the Bush administration,” whose budget policies are causing massive federal budget deficits while funding tax breaks for the wealthy, the report says. Bush’s proposed fiscal year (FY) 2005 budget, with its permanent tax cuts for the rich, would aggravate the crisis, the report says.
Education, Public Safety, Health Care at Risk
States’ budget woes mean at least 175,000 public-sector jobs have been eliminated since February 2003, according to the Labor Research Association. Such cuts could imperil public safety. In just one example, Pittsburgh has laid off 103 police officers, forcing the city to disband its SWAT and mounted units.
States and school districts are short of funds needed to meet increasingly stringent federal educational standards. Bush was the architect of the No Child Left Behind Act (NCLB), but has failed to provide the necessary funding to help students meet the high standards in the law. That’s one reason such states as Virginia and Utah have considered going without federal funds altogether, rather than try to meet NCLB requirements with inadequate federal support.
In fact, the AFT report shows, initiatives to help students are getting crushed amid the states’ budget crises. Summer school programs for struggling students have been cut in school districts in 22 states. Colorado officials have cut school funding, leaving 1,900 fewer students with the opportunity to attend pre-kindergarten classes. Georgia lawmakers suspended the state’s reading program and class-size reduction initiative for students in grades 4–12.
The states’ budget crisis also is restricting access to health care. In fiscal years 2003 and 2004, states frequently reduced Medicaid costs by cutting or freezing payment rates for hospitals, doctors and nursing homes—further limiting access to health care for low-income Americans, AFT’s report says. Also cut: the State Children’s Health Insurance Programs (SCHIPs) which ensure health care for children in low-income families. Some states have halted enrollment, turned away children who meet state guidelines or raised eligibility requirements.
“The only way to reverse the serious damage inflicted on education, health care and public services is to halt harmful and reckless tax cuts and other misguided federal policies,” says Feldman.
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