States Climbing Out of the Recession by Spending Less

The USA Today has reported that states and cities have drastically cut their spending  at the end of 2011.  It was noted that this decrease in spending coincidentally came at a time when federal stimulus aid was coming to an end and therefore states had to spend less on such things as health care, projects, employees, roads, and college buildings.  This decline in spending has allowed states to end their fiscal years with evidence of budget relief and in some cases a surplus.

As noted in a previous post on the financial surplus in Michigan states are starting to come back the financial decline.  The federal Bureau of Economic Analysis reports that state and local spending was cut by $26 billion in the last few months of 2011 (1.2%).  The National Conference of State Legislatures states that this has built up the states’ confidence, who know have a positive outlook on their financial situation.  With federal aid providing less and less to state and local governments sales tax revenue has once again been the number one source of funds.

In the article the Center on Budget and Policy Priorities suggests that the current successes in the fight against this recession is because the relief money to state and local governments got distributed quicker than in the past, which boosted the states’ economy when they needed it the most.

The article is available here.