download adobe free softwarebuy cheap adobe acrobat x free download for adobe acrobat download adobe pro 8 cheap adobe acrobat reader download the free adobe cs2 download trial
free download of adobe pagemakercheap cs5 master collection download adobe reader pdf free adobe acrobat download warez cheap adobe download free reader
download adobe cs3cs5 buy cheap adobe photo editor download adobe acrobat megaupload direct download buy cheap adobe reader slowenian download find free adobe download
adobe photoshop starter edition free downloadcheap premiere pro cs5 adobe reader download distribution adobe audition free download buy cheap free download install adobe acrobat reader adobe photoshop free download
adobe file converter downloadcheap adobe acrobat 3d download trial version of adobe acrobat 8 professional adobe flash reader download cheapest adobe indesign download
how to download actions in adobe photoshopcheapest Creative Suite 5.5 adobe flash download free adobe distiller free download cheap download adobe photoshop adobe file converter download
adobe imageready free downloadcheapest Dreamweaver CS5.5 adobe photoshop 5 download download adobe flash player stand alone cheap adobe svg plugin download
adobe flash player 9 free downloadAdobe Flash CS5.5/a> adobe photoshop element 6 free download free pc download adobe pagemaker cheap download adobe photoshop elements 4
download adobe illustrator 9cheapest in copy adobe cs6 adobe office download adobe flashplayer download center cheap free download adobe illustrator cs3 free adobe photoshop cs3 download
adobe photoshop elements free downloadadobe creative suite 6 buy cheap adobe photoshop cs3 brushes for download download adobe player buy cheap freeware adobe acrobat download
adobe internet explorer download securitycheapest Photoshop CS6 adobe premmiere free download ppd download adobe buy cheap adobe mp9 free download
free download hustler magazine in adobe formatFlash Professional CS6 cheapest adobe premiere download adobe premire download cheapest download adobe free software download adobe illustrator
download adobe photoshop elements 5 for freecheap Photoshop CS6 mac adobe fash player download adobe reader 7 free download cheapest adobe flash free download
download adobe illustratorAdobe Creative Suite 6 cheapest iran adobe photoshop download download adobe photoshop 50 buy cheap how to download pages with adobe flash download adobe acrobat reader5
adobe 10 downloadadobe software cheapest adobe illustrator 9 download latest adobe flash player download cheapest adobe premiere pro download
adobe file converter downloadbuy cheap creative suite 5 download adobe flash 9 for pda adobe flash player active x download buy cheap download free adobe illustrator program mac os
get free download of adobe flash cs3cheapest adobe incopy download adobe flash movie streams download adobe photoshop 9 buy cheap adobe pdf free download adobe flash logos download
download adobe illustratoradobe creative suite 5 buy cheap adobe flash player free download repair latest adobe flash player download discount adobe premiere tryout 6 download adobe writer download crack
adobe acrobat pdf writer downloadphotoshop lightroom 3 discount adobe photo shop elements download adobe reader tar gz download buy cheap download adobe conference off internet adobe acrobat reader download
download adobe photoshop fullcs5 master collection cheapest download adobe photoshop 7 0 free download adobe premiere cheapest adobe illustrator cs2 download adobe pagemaker free full download
adobe cs3 classroom in a book lesson files downloadadobe premiere pro buy cheap download adobe pdf viewer adobe 6 free download discount adobe web player download
download adobe reader 601msiadobe web premium discount download adobe reader free download adobe reader for mac os 10 cheapest acrobat acrobat adobe download download reader adobe slovar download
July 18th, 2012
July 17, 2012
By MARY WILLIAMS WALSH and MICHAEL COOPER
WASHINGTON — The fiscal crisis for states will persist long after the economy rebounds as they confront rising health care costs, underfunded pensions, ignored infrastructure needs, eroding revenues and expected federal budget cuts, according to a report issued here Tuesday by a task force of respected budget experts.
The problems facing states are often masked by lax budget laws and opaque accounting practices, according to the report, an independent analysis of six large states released by the State Budget Crisis Task Force.
It said that the financial collapse of 2008, which caused the most serious fiscal crisis for states since the Great Depression, exposed deep-set financial challenges that will worsen if no action is taken.
“The ability of the states to meet their obligations to public employees, to creditors and most critically to the education and well-being of their citizens is threatened,” warned the chairmen of the task force, Richard Ravitch, a former lieutenant governor of New York, and Paul A. Volcker, a former chairman of the Federal Reserve.
The report added a strong dose of fiscal pessimism just as many states have seen their immediate budget pressures begin to ease. And it called into question how states will restore the services they have cut during the downturn, saying that the loss of jobs in prisons, hospitals, courts and agencies have been more severe than in any of the past nine recessions.
“This is a fundamental shift in the way governments have responded to recessions and appears to signal a willingness to ‘unbuild’ state government in a way that has not been done before,” it said, noting that court systems had cut their hours in many states, delaying actions including divorce settlements and criminal trials.
The report arrived at a delicate political moment. States are deciding whether to expand their Medicaid programs to cover the uninsured poor as part of the new health care law, with the federal government pledging to pay the full cost at first. Public-sector unions feel besieged, as states and cities from Wisconsin to San Jose, Calif., have moved to save money on pensions. And Washington’s focus on deficit reduction — with big budget cuts scheduled for after the fall election — has made cuts to state aid inevitable, many governors believe.
If federal grants to the states were cut by just 10 percent, the report said, the loss to state and local government budgets would be more than $60 billion a year — nearly twice the size of the combined tax increases that states enacted during the fiscal crisis from 2008 to 2011.
Things are worse than they appear, the report contends.
Even before the recession, Medicaid spending was growing faster than state revenues, and the downturn led to higher caseloads — making the program the biggest share of state spending, as states have cut aid to schools and universities. States have not set aside enough money to cover the health and retirement benefits they owe their workers. Important revenue sources are being eroded: states are losing billions of sales tax dollars to Internet sales and to an economy in which much consumer spending has shifted from buying goods to buying lightly taxed services. Gas tax revenues have not kept up with urgent infrastructure needs. And distressed cities and counties pose challenges to states.
While almost all states are required by law to balance their budgets each year, the report said that many have relied on gimmicks and nonrecurring revenues in recent years to mask the continuing imbalance between the revenues they take in and the expenses they face — and that lax accounting systems allow them to do so.
The report focused on California, Illinois, New Jersey, New York, Texas and Virginia, and found that all have relied on some gimmicks in recent years.
California borrowed money several times over the past decade to generate budget cash. New York delayed paying income tax refunds one year to push the costs into the next year and raided several state funds that were supposed to be dedicated to other uses. New Jersey borrowed against the money it received from its share of the tobacco settlement and, along with Virginia, failed to make all of the required payments to its pension funds.
Texas delayed $2 billion worth of payments by a month — pushing the expenses into the next year. Illinois has billions of dollars of unpaid bills and borrowed money to put in its pension funds.
Desperate budget officials often see public pension funds as an almost irresistible pool of money. One common way of “borrowing” pension money is not to make each year’s “annual required contribution,” the amount actuaries calculate must be set aside to cover future payments. Despite its name, there is usually no enforceable law requiring that it be paid.
As a result, the report found that from 2007 to 2011, state and local governments shortchanged their pension plans by more than $50 billion — an amount that has nothing to do with the market losses of 2008, which caused even more harm.
When money is withheld from a pension fund, the arrears can snowball, because most states count on the money compounding at a rate of about 8 percent a year. Eventually the unfunded liability grows unmanageable. And states and municipalities have promised an estimated $1 trillion in health benefits — that most have not started saving for — to their retirees.
While the report called New York’s practice of delaying payments to its pension fund a “gimmick,” Morris Peters, a spokesman for the state’s budget division, said that the state was not relying on any new gimmicks. But the state comptroller, Thomas P. DiNapoli, praised the task force for “bringing the severity of this crisis to the fore.”
Others welcomed parts of the report. Matt Fabian, the managing director of Municipal Market Advisors, a research and consulting firm, said that while it might alarm some investors in the short term, “in the long term it’s a good thing for creditors to get a handle on these costs.”
And Kerry Korpi, the director of research at the American Federation of State, County and Municipal Employees, agreed with its findings that the federal government should consider how its actions impact state and local governments, and that states should modernize their tax systems to pay for needed services.
The task force chairmen said they wanted to call attention to the severity of the problem without making it worse by spooking the investors who buy municipal bonds. State and local governments cannot function if they lose their access to credit, as New York City did in 1975.
Mr. Ravitch, a primary player in resolving New York City’s near breakdown, said he did not see the states’ problems today as analogous. The states, he said, are not juggling the giant load of short-term debt that New York City had back then.
Mr. Volcker disagreed.
“New York City went and spent a lot of money they didn’t have,” Mr. Volcker said. “We’re doing exactly the same thing today on a grander scale.” He said that it was characteristic of financial markets to fail to respond to problems until they became a crisis.
“They’ll lend right up to the brink,” he said. “That’s the lesson of this. You don’t want to act too late.”
Thomas Kaplan contributed reporting from New York.
VIEW THE REPORT OR THE REPORT SUMMARY HERE.