Fiscal 50: State Trends and Analysis
Even states that have overcome the effects of the recession may face financial pressures that could shape their budgets now and for years to come. A major issue for a number of states is how to cope with an accumulation of unfunded public pension and retiree health care liabilities, which total more than $1.5 trillion nationwide. In addition, debate among U.S. lawmakers over financing for Medicaid, which is jointly funded by federal and state governments, has sparked fresh uncertainty over how much of the costs states will pay. The health care program accounts for the largest share of total federal aid to states. Another challenge for states is tax revenue volatility, which can confound policymakers’ best efforts to balance budgets.