States continue to feel recession’s impact

A report from the Center on Budget and Policy Priorities shows 44 states and the District of Columbia are projecting budget deficits totaling $125 billion for the 2012 fiscal year.

With federal assistance mostly gone by the end of fiscal year 2011, options are dwindling for the states. Even after states receive a total of $6 billion in aid from the Recovery Act, the U.S. states are projected to fall $134 billion short of their budgets combined. The Recovery Act offered $59 billion in assistance for the FY 2011 and $68 billion for the FY 2010; both years showed a shortfall for the states combined of over $100 billion dollars.

A number of governors have responded to the upcoming fiscal year by creating massive cuts to state services on top of cuts already made since the current recession.

The report shows slow signs of recovery after next year are visible. Only 11 states and Washington D.C. have reported new shortfalls in the 2011 budgets. And while 22 states are projecting a combined shortfall of $70 billion in FY 2013, the number has begun declining since FY 2010 where it reached its highest at $191 billion.

With not all states have prepared estimates for FY 2013, the total is expected to grow.

The below table shows the FY 2011 gap and the projected FY 2012 gap for MDN states: