The current state of American government budgeting practices may need some significant alterations going forward, and doing so can make the situation much more viable down the road.
At the state level, there needs to be notable changes to budgeting at present, as this can help these areas better serve their people in the future, according to a report from the State Budget Crisis Task force, which had contributions from the Stanford Institute for Economic Policy Research. The issues were focused on New York, Texas, California, Virginia, New Jersey and Illinois, and worked to determine the viability of many local services that were crucial to these areas’ continued positive performance. Whether it was education, health, transportation or other notable aspects, some significant work needed to be done.
Some specific aspects of local economies struggled to remain relevantly funded, even if the local economy itself improved since the recession, the report explained. One of the biggest issues was debt obligations, as these are getting too high for states to keep up.
Other issues include the continued strain of health care and retirement spending, as revenues cannot keep up with them, the report noted. Pension shortfalls remain a major concern, and these have yet to be dealt with. In a similar vain, further budgeting issues may surface as the Affordable Care Act matures.
“This report should be read by everyone who cares about future generations,” said David Crane, research scholar and public policy lecturer at Stanford University. “Its principal recommendation – that states adopt accrual-based budgeting – will stop governments from reporting surpluses when they have deficits and elected officials from putting off until tomorrow what they should do today.”
State fiscal conditions still experience slow growth
While there may be signs of improvement, many states may need to put extra care in further strengthening the situation. According to a report from The National Association of State Budget Officers, overall fiscal conditions at the state level should improve slightly compared to 2013.
Another issue that may help the situation is that fiscal distress may fall during the year, the report explained. One of the issues that could benefit states is that tax collections rose to a level not expected during 2013, and revenues also posted notable figures.
However, revenues may grow much more slowly next year, the report added. this could hurt budgeting aspirations by many states in the future.