Advertisement
YOU ARE HERE: LAT HomeCollectionsFinances

States' only option now is budget pain

Healthcare, parks, schools: Politicians' proposals to close budget gaps would hit where it hurts. Even zoo animals may not get a break.

February 08, 2009|Ashley Powers and Richard Fausset

LAS VEGAS AND ATLANTA — They have plundered reserves, enacted hiring freezes and engaged in all manner of budgetary voodoo to shield us from the pain.

But now state governments -- reeling from a historic free fall in tax revenue -- have run out of tricks. And Americans are about to feel it.

In some cases, they already have.

Nevada resident Margaret Frye-Jackman, 71, was diagnosed in August with ovarian cancer. She had two rounds of chemotherapy at University Medical Center, the only public hospital in the Las Vegas area.

Soon after, she and her daughter heard the news on TV: The hospital's outpatient oncology services were closing because of state Medicaid cuts. Treatment for Frye-Jackman and hundreds of other cancer patients was eliminated.

Luckily, Frye-Jackman's gynecological oncologist, Dr. Nick Spirtos, decided to open a tiny chemotherapy center in his office's empty storage room.

Today, he treats Frye-Jackman there, along with about 20 more cancer patients who were dumped by the hospital. Frye-Jackman's care is paid for with Medicare and supplemental insurance, but other patients can't cover the cost of full treatment. The doctor has considered putting donation boxes in the lobby.

"If this is what it's like in Nevada, with cancer stuff closing, is it like that everywhere?" said Frye-Jackman's daughter, Margaret Bakes, accompanying her mother to the doctor's recently. "Are all the other states closing stuff too?"

The answer, in at least 39 states, is "yes" -- or "soon." With personal, sales and corporate income tax revenue plummeting, state governments -- which recently trimmed their budgets to cover a cumulative $40.3-billion shortfall for the current fiscal year -- are now watching in horror as a $47.4-billion gap opens for 2009.

And for fiscal year 2010, they will face a $84.3-billion hole, according to the National Conference of State Legislatures. The total shortfall through fiscal 2011 is estimated at $350 billion, according to the Center on Budget and Policy Priorities, a nonpartisan think tank in Washington.

Unlike the federal government, nearly all states must balance their budgets. So legislatures either have to raise taxes, borrow money from dwindling rainy-day funds, or cut. The last option is becoming increasingly common.

"The easy budget fixes are long gone," Corina Eckl, fiscal program director for the National Conference of State Legislatures, said in a statement. "Only hard and unpopular options remain."

State lawmakers can expect some relief from the federal stimulus package -- but it is far from a cure-all. The version passed by the House of Representatives would cover only about 45% of the projected state deficits. A Senate version of the bill, which has yet to be approved, would, in its present form, offer even less relief.

The budget-cutting plans that have emerged from state capitols so far have a potential effect on almost everyone. Parks will close. Environmental programs will be scaled back. Bus and ferry routes will shut down, possibly sending more drivers onto clogged streets and highways. Schools may go without school nurses, and classes may become more crowded. Sick people who rely on state health programs may instead get sicker.

Washington state's predicament illustrates the brutal reality lawmakers are facing in the hardest-hit states. Washington's budget gap for 2010 will total 18.5% of its general fund, making it the sixth-worst situation in the nation. (Nevada is facing the most serious shortfall, with a 38% gap; California's 22% gap is the fourth-worst, behind Arizona at 28% and New York at 24%, according to the National Conference of State Legislatures.)

The Evergreen State must close a $5.7-billion shortfall in the next two years. Raising taxes there, as in many other states, continues to be an unpalatable strategy for politicians: Democratic Gov. Chris Gregoire, amid a tough reelection bid last year, made a no-new-taxes pledge and appears to be sticking to it.

That leaves lawmakers in the Olympia statehouse slugging it out over what to cut.

The governor has proposed pay freezes and layoffs for teachers and other state employees, a $350-million reduction in funding for higher education, closure of 13 state parks, early release for low-risk prisoners, and a 42% reduction in the state's popular health insurance program for the working poor -- a program that provides last-resort coverage to 104,000 people.

The plan also would eliminate cash grants and health insurance for about 16,000 state residents who are temporarily disabled. The proposal wasn't some exaggerated public relations ploy to lure federal stimulus cash: In fact, it already factors in about $1 billion in federal aid. The reality has been sobering for a state that has prided itself on generously funded social programs.

Advertisement
Los Angeles Times Articles
|
|
|