The report of the State Budget Crisis Task Force is out and things look pretty bad. We're getting older. We have yet to rein in health costs. The federal payments to the states will likely decrease. Pensions have been underfunded. Cities and towns are struggling. State accounting systems stink.
The Task Force, which is made up of some heavy hitters of both major parties, doesn't think the problems will be solved when, if ever, the economy comes back. Here are its recommendations and conclusions.
- The public needs transparent, accountable state government finances.
- States should strengthen and make better use of their main tool for counter-cyclical policy, their rainy day funds.
- Few state governments have effective procedures for monitoring the fiscal condition of their local governments in a timely manner or taking early action to help local governments resolve their fiscal problems before they threaten insolvency or bankruptcy.
- Essential state and local infrastructure is starved of funding and necessary maintenance.
- Federal deficit reduction and budget balancing actions pose serious potential threats to
state and local government economies and budgets. - Pension systems and states need to account clearly for the risks they assume and more fully disclose the potential shortfalls they face.
- State tax bases have eroded and become more volatile; these developments are undermining fiscal sustainability
- Federal and state governments should work together to control health care costs and
Medicaid costs.
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