💸States face budget squeeze as revenues slow and pensions rise
Economy
After years of pandemic‑era surpluses, states face a sharp slowdown. NASBO reports general‑fund growth of just 3.2%, Moody’s stripped the U.S. of its AAA rating, and capital‑gains tax receipts have cratered—leaving California and New York with multibillion‑dollar gaps. Rainy‑day funds are shrinking for the first time in a decade, while under‑funded pensions like Illinois TRS slipped below the 60% “critical” line.
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Key Takeaways
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Why This Matters
🏛️ Your Services: Budget gaps threaten K‑12 funding, Medicaid eligibility, and road maintenance in your state
State fiscal crises directly affect essential public services while budget cuts reduce education, healthcare, and infrastructure support for communities.
💰 Your Taxes: Shrinking reserves and credit downgrades raise borrowing costs that could translate into higher taxes or fees
State financial problems increase costs for taxpayers while credit downgrades make government borrowing more expensive and services more costly.
👴 Your Retirement: Pension shortfalls imperil benefits for millions of public‑sector workers and retirees
State budget crises threaten retirement security while pension obligations compete with current services for limited resources.
💼 Your Economy: State spending cuts can drag on local job growth just as the national economy cools
Government budget cuts reduce economic activity while state employment and spending support local business growth and job creation.
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Detailed Content
3
LA Times reported California’s estimated 2025 deficit at roughly what amount?
Multiple Choice
California
4
NY Comptroller’s February 2025 report projects a cumulative three‑year gap of how much?
Multiple Choice
New York
6
CBO projects net interest costs for states will rise by what percent between 2024 and 2028?
Multiple Choice
Interest
8
Which revenue source declined the most across states in FY 2024 according to NASBO?
Multiple Choice
Revenue
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