Passing Problems to States

By David Sirota, Christy Harvey and Judd Legum, The Progress Report. Posted May 12, 2004.

The Center on Budget and Policy Priorities today released a report analyzing how the Bush administration's federal policies have affected state budgets -- and the findings are not pretty. All told, states have faced $190 billion in deficits over the past three years, and this year face another $40 billion hole. Of that budget gap, $175 billion has been the direct result of federal policies, including the White House's refusal to fully fund federal mandates like the No Child Left Behind Act and its elimination of various taxes on the wealthy which states rely on for revenue. Make sure to see the report's state-by-state section, detailing how federal policies have affected where you live.

An analysis by the Urban Institute-Brookings Tax Policy Center shows that two-thirds of the Bush tax cuts this year are going to the top fifth of the population, while at the same time, many states have been forced to raise taxes and fees that disproportionately hit the middle class. Under President Bush, states have raised taxes by a total of $14.5 billion, after seven consecutive years of cutting taxes -- all while cutting key health care and education services for the middle class.

The refusal to fully fund the No Child Left Behind Act, special education and other programs has left states facing a $72 billion unfunded mandate. The president tried to defend that underfunding in a visit to Arkansas yesterday, but the local statistics there are grim: Because the president has not fully funded his own education bill, more than 12,000 disadvantaged children from the area Bush visited in Arkansas (the 3rd district) will be left out of Title I assistance, and more than 6,000 will not be able to enroll in the Head Start program. While Bush told the Arkansas audience that he "understands that people need extra help" with education and that "the federal government is responding," his budget leaves a total of 60,000 disadvantaged Arkansas kids out of Title I assistance this year. Meanwhile, Bush's federal policies drain more than $1 billion from the state's revenues. See a congressional district-by-district breakdown of how the White House's underfunding of education affects your area.

The one-two punch of underfunding education and the federal revenue siphon is reverberating in other states across America: In Kentucky, where Bush policies have meant more than $2 billion less in state revenues, the legislature is considering massive cuts to technical colleges. In California, where Bush policies have reduced revenues by more than $23 billion, Gov. Arnold Schwarzenegger (R) is considering major cuts to higher education. And in Mississippi, where Bush policies have drained $1.8 billion from state revenues (more than 10 percent of the entire state's budget), the legislature recently completed a budget that local newspapers note "leaves deep cuts in many agency budgets, including K-12 education."

The CBPP report also points out that the administration's refusal to enact a serious prescription drug benefit and to address the burgeoning health care crisis is squeezing state Medicaid budgets. States are now spending about $28 billion to provide medicines to low-income elderly. A new report by the Kaiser Family Foundation shows that state, local and federal governments are absorbing $34.6 billion in costs to cover medical care for the uninsured, in the absence of a serious national health care program.

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