Great NYTimes article on economic problems, MUST READ

http://www.nytimes.com/2003/07/28/business/28ECON.html?hp

Red Ink in States Beginning to Hurt Economic Recovery
By LOUIS UCHITELLE

Having already stripped the nation of a source of economic growth, the budget crises in California and in almost every other state are now beginning to drag down the national economy, prolonging the weak, jobless recovery, the latest budget numbers show.

Over the past two years, the states have gradually cut between $20 billion and $40 billion — no one knows exactly how much — from their spending. Billions more in cutbacks are coming in the fiscal year that started July 1. In California alone, a tentative budget deal will presumably require the state to rid itself of at least $8 billion in current spending, with the cuts likely to fall most heavily on education and aid to the poor.

The numbers are hard to add up, but even the most optimistic accounting has state spending slowing sharply while tax rates rise along with a variety of fees. Just three years ago, the states were still a plus for the economy. While the private sector had begun to limp, state spending had remained strong and so had revenues, despite cuts in tax rates in several states.

news if anyone has been paying attention for the past year or so.

States and municipalities have been laying off, reducing by attrition, and cutting contracting down to essentials. Property and other local taxes are being raised to cover pothole repair and schools after reduced state help. This year's NJ budget, ferinstance, originally cut out ALL arts spending. Nada. Zero state spending on the arts. And this after several towns had no money for local museums, forcing them to shut down.

Aside from any arguments about whether or not government should support the arts (I'm one who believes gummint should, btw) NJ museums, festivals, theaters, and etc. generate millions in revenue, so there is a huge multiplier from the state spending.

Things aren't quite as drastic as it may sound from this, and we're not drying up culturally, but there's a huge revenue stream that's slowing down in part from state budget problems.

And that's just one small problem among so many around the country. At least we're not closing firehouses like NYC is.

Yet.