MNeagle
4th June 2010, 07:38 AM
By Conor Dougherty
While federal employment surged last month, the ailing state and local government sector continues to be a weak spot in the recovery. The state and local government sectors shed a combined 22,000 jobs last month, the largest drop since February. State and local government are down 231,000 jobs from their peak employment in August 2008, with losses in 15 of 21 months.
This is to be expected, given the mammoth budget deficits governments have faced. And it’s likely that state and local government will continue to drag on employment for at least the next few months, possibly much longer. A report this week from the National Governors Association and the National Association of State Budget Officers showed that states still face some $127 billion in budget gaps over the next year.
But several indicators suggest that the next round of budgeting will come from even deeper cuts, which likely means more layoffs. That’s because, unlike last year, when states passed some $24 billion in tax and fees, in the upcoming fiscal year (which is an election year and starts at the end of the month) governors projected budgets are on pace for just $3 billion in new taxes and fees. What’s more, states’ portion of the stimulus will have been pretty much spent by the close of the 2011 fiscal year that ends next June. Add that to budget reserves that have been cut in half over the past three years (to about 6% of state revenues from a peak of 12%) and weak April tax collections, and it appears that cities and states are fast running out of wiggling room.
http://blogs.wsj.com/economics/2010/06/04/state-and-local-government-still-firing/
While federal employment surged last month, the ailing state and local government sector continues to be a weak spot in the recovery. The state and local government sectors shed a combined 22,000 jobs last month, the largest drop since February. State and local government are down 231,000 jobs from their peak employment in August 2008, with losses in 15 of 21 months.
This is to be expected, given the mammoth budget deficits governments have faced. And it’s likely that state and local government will continue to drag on employment for at least the next few months, possibly much longer. A report this week from the National Governors Association and the National Association of State Budget Officers showed that states still face some $127 billion in budget gaps over the next year.
But several indicators suggest that the next round of budgeting will come from even deeper cuts, which likely means more layoffs. That’s because, unlike last year, when states passed some $24 billion in tax and fees, in the upcoming fiscal year (which is an election year and starts at the end of the month) governors projected budgets are on pace for just $3 billion in new taxes and fees. What’s more, states’ portion of the stimulus will have been pretty much spent by the close of the 2011 fiscal year that ends next June. Add that to budget reserves that have been cut in half over the past three years (to about 6% of state revenues from a peak of 12%) and weak April tax collections, and it appears that cities and states are fast running out of wiggling room.
http://blogs.wsj.com/economics/2010/06/04/state-and-local-government-still-firing/