The economic recovery has produced larger-than-expected surpluses for many states, and their elected officials are considering what to do with the windfalls.
Unfortunately, many state lawmakers have put forward plans that address short-term issues while ignoring more important long-term fiscal concerns such as the need to replenish rainy day funds and curb rising pension and health care costs.
A recent report by the State Budget Crisis Task Force warns that many state governments have done little to deal with the structural budget problems that have begun to crowd out funding for other priorities. The task force is chaired by former New York Lt. Gov. Richard Ravitch and Paul Volcker, who also serves on The Concord Coalition’s Board of Directors.
A recent study by the Center on Budget and Policy Priorities found that most states under-utilize tools that can help build sustainable fiscal policies. These tools include multi-year budgets and independent offices to prepare credible estimates on spending and tax proposals, as the Congressional Budget Office does at the federal level.
As state officials decide what to do with their new-found surpluses, they have opportunities to positively impact on the long-term fiscal health of their states. They should not let those opportunities go to waste.External links:Battles Loom in Many States Over What to Do With Budget Surpluses (New York Times)Task Force Identifies Growing Fiscal Challenges for States (Concord Coalition Blog Post)State Budget Crisis Task ForceBudgeting for the Future: Fiscal Planning Tools Can Show the Way (CBPP)State and Local Governments’ Fiscal Outlook (GAO)