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January 2012 Policy Study, Number 12-1


Iowa's Privileged Class: Time for a Change!

    Overall State Budget Issues


Of additional concern, nationwide, is the overall slow recovery of state revenue or tax collections – combined with the inability of many State Legislators and Governors to sufficiently cut spending. Coming out of the 2008 recession there are still significant gaps in many states between projected spending and revenue. These gaps directly affect state employee pensions, as the majority of state spending is for salaries and benefits.


The total budget gaps reported by the states between fiscal year 2009 and 2011 were approximately $230 billion. The problem continues, as according to data gathered by the National Governors Association (NGA) and National Association of State Budget Officers (NASBO), “39 states had to close $95 billion in gaps for fiscal 2012.”[23]


Responses to the budget gaps vary widely from state to state. In fiscal year 2012 some states chose to delay or cancel state employee salary increases and some increased the pension and health insurance contributions – either personal, state, or both. Still others thought the overall budget situation was in good shape and chose to enact or allow scheduled compensation increases.[24]



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