Only the Beginning

by NCSL Staff

States are watching Congress as they continue to negotiate and work through a 700 billion 'bailout plan' of Wall Street.

Many people want to know how this plan will impact states and state budgets. Unfortunately, it is just too early to tell.

"States have a $40 billion budget problem nationwide and it didn't just start last week," said federal affairs council Michael Bird, who works a stone's throw from Capitol Hill in NCSL's Washington, DC, office. "Let's take a look at a year ago when the sub-prime mortgage crisis and housing market started to fall apart. States began suffering two-fold: a decline in property tax revenue because of the increase in home foreclosures and a decline in sales tax revenues as consumers began to spend less and tighten their belts."

As Congress works through the details of this new aid package, NCSL will remind our friends on Capitol Hill about the potential impact on state property, pension funds and loans for capital improvement projects.

Historically, states lag the national economy by roughly 18 months. So we're not looking for a real up-tick until 2010. Without knowing what packages might be coming from Congress and the White House, states will have to find ways to balance state budgets, fund programs and provide essential services without leaving those most vulnerable and at-risk in a lurch.

It's a challenge that states are only seeing the beginning of.

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[TELEPROMPTER PRESIDENT]

THE TELEPROMPTER PRESIDENT at URL http://www.TeleprompterPresident.com has an excellent video on What Caused Our Economic Crisis. Here's the link: http://www.teleprompterpresident.com/2008/10/what-caused-our.html