Saying that economic recovery has brought little fiscal relief so far, the chairman of the National Governors' Association warned yesterday that the states face a "near crisis" in finances and that budget reserves will reach an all-time low this year.
Utah Gov. Scott M. Matheson (D) said the outlook for 1984 "remains grim," despite signs of an upturn and actions in almost half the states to raise taxes as the recession ends. Matheson released a report on the "near-crisis" in state finances as the executive committee of NGA met to consider pending national legislation to deal with the medical insurance needs of the unemployed.
After the session, Matheson said the governors were "absolutely opposed" to bills that would require the states to pick up a portion of the costs of a new medical program for those out of work and their families.
"When we're broke, how can we pay for something new?" he asked rhetorically.
The House Commerce Committee is scheduled to vote today on a bill by Rep. Henry A. Waxman (D-Calif.) to provide health benefits for the unemployed. Senate Finance Committee Chairman Robert J. Dole (R-Kan.) has introduced another measure, one that also requires state matching funds.
According to the 50-state survey Matheson released, the end-of-year balances are expected to be $345 million this year, down from $4.8 billion in fiscal 1982.
Despite constitutional or statutory bans on deficit spending, six states--California, Connecticut, Nebraska, New Hampshire, Pennsylvania and Wisconsin--will end the fiscal year in the red, according to the survey. Vermont, the only state that is legally free to run a deficit, will do so this year, according to its governor, Richard A. Snelling (R).
Twenty-six of the 50 states will end this fiscal year with balances of less than 1 percent of their current expenditures, the survey said. Matheson noted that most states had trimmed their budgets during the recession through hiring freezes, layoffs and program cutbacks.
And he cited a study by the National Conference of State Legislatures showing that 24 states have raised taxes this year--more than half of them on sales or income tax rates.
Matheson said that these actions, coinciding with cuts in federal income tax rates, indicate that overall "there has been more of a shift than a cut" in the country's taxes.
As for the future, Matheson said that "most governors were more optimistic in February than they are now, because revenues have not gone up and unemployment and interest rates have not come down."
He said he still hoped for accelerated economic recovery in the second half of 1983, but pointed out that the survey forecast almost no improvement in the 1984 balance sheets for the states--a gain from $345 million to $468 million in combined budgets of $175 billion.
According to the survey, Maryland projects a fiscal 1983 balance of $13 million, down from $19 million last year. A $15 million balance is estimated for next year.
For Virginia, the estimate is a zero balance this year, down from $198 million last year, and climbing only to $1 million next year.