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Jan. 29, 2011

Budget Issues Will Dominate Debate, Legislatures this Session

CSG Releases Top 5 Fiscal Issues States Face
LEXINGTON, Ky.—The top issue for any state this legislative session is bound to be the budget. According to the Center on Budget and Policy Priorities, states have been faced with budget deficits of $130 billion during the 2011 fiscal year. That number is likely to grow to an additional $140 billion shortfall for 2012.
To put these issues into perspective, The Council of State Governments’ policy staff has created a list of the top five fiscal issues for this legislative year. One of the top issues—which is likely to be a hot-button topic--will be the possibility of raising taxes and fees. States will be re-examining the income tax rate for the highest earners, looking at taxing Internet sales and could be considering temporary fees or taxes.
Policymakers also will have to take a hard, sober look at their increasingly complex and structurally unsustainable systems of tax exemptions. That includes looking at sales taxes that were put into place at a time when agriculture and manufacturing were the primary engines for growth, rather than the service-based industry we see today.
“Looking at how to generate more revenue to deal with these massive budget shortfalls states are facing is one of the most important issues policymakers will be dealing with this year,” said Jennifer Burnett, CSG’s senior research analyst. “Almost all states are constitutionally required to have a balanced budget, so that means either massive budget cutting, big tax increases or some combination of the two. The economic conditions of the past several years have offered states a big dose of fiscal reality and how they find new and innovative ways to resolve these issues is something CSG will be closely watching.”
The Council of State Governments can not only help legislators, policymakers and the public understand the issues, but also provide reliable information about new and innovative ways states are dealing with these challenges.
To learn more about the Top 5 fiscal issues, visit here. For more information about this or any other topics, visit CSG’s Knowledge Center.



The Council of State Governments is our nation’s only organization serving all three branches of state government. CSG is a region-based forum that fosters the exchange of insights and ideas to help state officials shape public policy. This offers unparalleled regional, national and international opportunities to network, develop leaders, collaborate and create problem-solving partnerships.