Surpluses Help, but Fiscal Woes for States Go On
By MICHAEL COOPER and MARY WILLIAMS WALSH, NYT
While the fiscal picture is brightening around the country, with many states expecting surpluses this year after years of deficits and wrenching budget crises, mounting Medicaid costs and underfunded retirement promises are continuing to cloud their long-term outlook.
And some of the surpluses that are materializing, as welcome as they are, are not as robust as they appear at first glance — especially as bills come due for some of the costs that states put off during the long economic downturn.
When Texas lawmakers went into session in January, they were met with some good news: the state was projecting an $8.8 billion surplus when its two-year budget cycle ends in August. But it turned out that much of that extra money was already spoken for: more than half of it had to be used to pay Medicaid costs the state had delayed paying earlier.
And Texas, like many states, has not been fully funding its pensions. Last year the state contributed just 49.2 percent of what actuaries said was needed by the state workers’ pension fund. Eventually the remaining money, around $358 million, will still have to be put into the fund, along with the 8 percent investment return the fund is supposed to earn each year.
(More here.)
While the fiscal picture is brightening around the country, with many states expecting surpluses this year after years of deficits and wrenching budget crises, mounting Medicaid costs and underfunded retirement promises are continuing to cloud their long-term outlook.
And some of the surpluses that are materializing, as welcome as they are, are not as robust as they appear at first glance — especially as bills come due for some of the costs that states put off during the long economic downturn.
When Texas lawmakers went into session in January, they were met with some good news: the state was projecting an $8.8 billion surplus when its two-year budget cycle ends in August. But it turned out that much of that extra money was already spoken for: more than half of it had to be used to pay Medicaid costs the state had delayed paying earlier.
And Texas, like many states, has not been fully funding its pensions. Last year the state contributed just 49.2 percent of what actuaries said was needed by the state workers’ pension fund. Eventually the remaining money, around $358 million, will still have to be put into the fund, along with the 8 percent investment return the fund is supposed to earn each year.
(More here.)
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