Whether they welcomed or snubbed the federal economic stimulus package, state lawmakers took advantage of the bailout dollars this year to help patch their state's shaky finances.
Now, as they start thinking ahead to next year's budget and the 2010 elections, lawmakers are increasingly apprehensive about what will happen when the stimulus money dries up. They predict even deeper cuts in services, higher taxes and raids on rainy day funds to balance budgets.
“What's the exit strategy when this is over?” asked state Rep. Steven Costantino, a Democrat from Rhode Island who heads the House Finance Committee. “The stimulus is really a one-shot infusion that at some point ends.”
Most of the $275 billion that states will receive from the $787 billion package will be spent in fiscal 2009, 2010 and 2011 budgets, with fewer dollars available in fiscal 2012.
The role of stimulus funds in helping soften the recession's blow on state budgets this year is clear from a newly released preliminary survey of half the states by the National Conference of State Legislatures. All of the 25 states surveyed said they used federal stimulus dollars for more than 20 percent of their gap-closing solution. The survey also shows how vulnerable states are as many start preparing for fiscal 2011 budgets.
Read the full report Tracking the Recession: Lawmakers Dreading End of Stimulus Dollars on Stateline.org.