October 2, 2014

Task Force Spotlights State Fiscal Challenges

  • Discretionary spending is the portion of the federal budget determined through the Congressional appropriations process. Approximately one-third of...

Many states face severe fiscal challenges that could be made even more difficult by Washington’s budget problems, according to the State Budget Crisis Task Force.

The bipartisan organization focused much of its research on six states. Its recently released reports on Texas and New York complete a series that also covers Illinois, California, New Jersey and Virginia.

Gridlock and irresponsible fiscal policies in Washington could aggravate the difficulties in these and other states. In an overview last year, the task force said states could “suffer greatly” from future federal cuts and warned that severe fiscal challenges were facing local governments as well.

The task force co-chairs are Richard Ravitch, former lieutenant governor of New York, and Paul A. Volcker, former chairman of the Federal Reserve. Volcker also serves on The Concord Coalition’s Board of Directors.

The task force report on Texas notes improvements there in the last two years but cautions that “the structural fiscal issues… have not gone away and will present challenges in future sessions.” The New York report points to challenges such as an aging population and an out-of-date transportation system.

There are parallels between federal and state budget concerns, as Volcker and Ravitch have made clear: “The existing trajectory of state spending, taxation, and administrative practices cannot be sustained.”