UNITED NATIONS - / MaximsNews Network / 2 July 2008 -- As a result of the onset of high inflation, dwindling tax revenues, the financial toll of the Iraqi war and a general national economic downturn in the U.S., states around the country are struggling to address growing budget gaps in the new fiscal year which began on July 1^st.

State tax revenues have fallen. Sales tax revenues are flat. Corporate income tax revenue has declined.  Funds from the federal government programs have been diminished.  And the anticipated continued weakness in the national economy dims prospects for the states in the immediate future. 

Consequently, many state legislatures are now caught up in budget battles that are pitting the needs of the education sector against those of social services as well as the much demanded infrastructure services.

Unlike previous economic downturns when states were also hurt by diminishing corporate and personal income tax revenue, the problems this time are more closely linked to the declines in sales taxes that have been prompted by the sub-prime mortgage crisis.  And in those states that do not have a personal income tax and rely on consumer spending, the problem has become most acute.

Lawmakers across the country are wrangling over how to pay for capital improvement projects including infrastructure development/renewal.  With the economic downturn that has now affected the country across the board, states are not able to keep up with those expenditures that began during the good times a few years back.

To compensate for the loss of tax revenue, some states are looking to their lotteries for revenue growth or in a few cases, borrowing sources. Other states are raising taxes on commodities like cigarettes.

And some states have resorted to borrowing funds to pay for their infrastructure needs. For example, the legislature branch for the Commonwealth of Pennsylvania has unanimously approved a plan to borrow US$800 million in order to cover the costs associated with improving state dams, flood control projects, and shoring up drinking water and sewer systems. To pay the money back, the Commonwealth will tap revenue from an already enacted 5% tax on slot-machine gambling.

Labels: United Nations, U.N., MaximsNews WATER, water, infrastructure, investment, United States, U.S., State budget, Pennsylvania, Kathy Shandling, international development, environment, water news, water sustainability, water resource, water management, global water crisis, sustainable development

 

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