💸States Confront Budget Squeeze Amid Slowing Revenues and Rising Pension Costs
Fiscal Policy
State Finance
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.
Your Taxes:
Shrinking reserves and credit downgrades raise borrowing costs that could translate into higher taxes or fees.
Your Retirement:
Pension shortfalls imperil benefits for millions of public‑sector workers and retirees.
Your Economy:
State spending cuts can drag on local job growth just as the national economy cools.
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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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