States in Crisis

Happy New Year! Or is it. Gerald Seib of The Wall Street Journal writes today in his column, "The Year Ahead - U.S. Focus 2010," about "States in Crisis." He says correctly that one of the great under-appreciated stories of 2009 was the deep fiscal woes of individual states.

"History shows that states - and cities - actually suffer their deepest drops in revenues after a recession ends, as the downturn's effects ripple through their tax streams. This year that problem will overlap precisely with a decline in stimulus dollars flowing out of Washington toward the states.

"The net result will be a double-whammy that will force states to cut spending and hiring and perhaps imperil recovery."

While there is no mention of counties, of course, the same logic applies. And most counties will further suffer revenue declines from reduced state aid. Counties are in for great challenges in 2010 and 2011 to maintain the level of services residents have come to expect.