The Nelson A. Rockefeller Institute believes that their “job is not to advocate particular policies, but to enhance the capacities of state governments and the federal system to deal effectively with the nation’s domestic challenges” (Rockefeller Institute of Government, 2011). They also state that “a fundamental strength of American government is the freedom of citizens to turn to multiple governments to respond to new public needs and put innovative measures into effect. To preserve this strength, American states must have the fiscal, administrative and political capacity to carry out these ever more complex responsibilities” (Rockefeller Institute of Government, 2011).
In a report in February 2009, the institute looked at what the state governments will do for funding when the stimulus money from the American Recovery and Reinvestment Act of 2009 essentially runs out. They look to answer the question: what will happen when the money runs out? In order to look deeper into the situation they look at two scenarios: low gap and high gap. The low gap scenario is where the fiscal crisis would potentially be less severe than the 2001 crisis, and the high gap scenario would be if state budget gaps approach a potentially hazardous $370 billion in the next 2.5 years (Boyd, 2009, p. 2).
In conclusion of the report, they state: “While the federal stimulus package is a huge boon to the finances of state governments, even under optimistic assumptions it is not large enough or sustained enough to eliminate the need for significant state spending cuts or tax increases” (Boyd, 2009, p. 6). They follow up with their conclusion by stating: “Budget gaps in fiscal 2012 will likely rival the critical shortfalls that states faced before enactment of the new stimulus package. Cuts or reductions in growth of spending on education, healthcare, and other programs, and/or major tax and other revenue increases, will almost certainly be on the table again” (Boyd, 2009, p. 6).
Resources
Boyd, D. J. (2009, February 19). What will happen to state budgets when the money runs out? Retrieved from The Nelson A. Rockefeller Institute of Government website: http://www.rockinst.org/pdf/government_finance/2009-02-19-What_Will_Happen_to.pdf
Rockefeller Institute of Government. (2011). Retrieved on October 22, 2011, from http://www.rockinst.org/
I find this study very interesting as it echos some of my thoughts about stimulus funding. Many institutions have come to rely on additional funding and will have detrimental effects on their functions when those funds are taken away. Particulary when it comes to staffing of people and positions that have been created (albeit, temporarily) as a result of the funding. When the stimulus money "runs out," we are all back to at least square one and perhaps may be even behind where we were when the monies were first made available.
ReplyDelete-Destin Tucker
This is a timely article because the UofM received ARRA funding a few years ago and it runs out next year. At the time the money was received it was a life saving measure because the University was facing budget cuts. While budgets were trimmed, some personnel and programs were saved for two years because of the ARRA funding. The hope was that enrollment would grow and the economy would recover placing the institution in a better position when the ARRA funding ran out. While enrollment has grown, the economy has not fully recovered and spending, while reduced, continued. Thus, the institution may be faced with decisions regarding how to meet budget needs when the ARRA funding runs out. Edwina T. Washington
ReplyDeleteI thought it was particularly interesting that this report was from 2009, and I feel that the most severe, high gap scenario, has actually occured, and it seems that rather than taking these last couple of years to figure a way for the future, the stimulus actually was just a way of pushing pause on what was to come.
ReplyDeleteK. Schaefer-Mumiukha