State, local governments face massive, growing budget gaps in 2015 and beyond
{{#rendered}} {{/rendered}}In this 2012 file photo, Illinois Gov. Pat Quinn delivers his State of the State address to the joint session of the General Assembly in Springfield, Ill. (Reuters)
As the calendar flips to 2015, fiscal pressures will continue to tax the budgets of state and local governments.
And that could mean higher taxes for many Americans.
Projections released this month by the Government Accountability Office show that state and local governments will see current gaps between revenues and expenditures continue to widen in 2015 and beyond. In aggregate, those governments are already underwater, and the amount of red ink will continue to grow over the next 50 years, unless changes are made, the GAO says.
{{#rendered}} {{/rendered}}Closing the gap will require aggregate budget cuts or tax increases of 18 percent.
"We calculated that closing the fiscal gap would require action to be taken today and maintained for each year equivalent to an 18 percent reduction in the state and local government sector's current expenditures. Closing the fiscal gap through revenue increases would require action of similar magnitude through increases in state and local tax revenues," the GAO found. "More likely, closing the fiscal gap would involve some combination of both expenditure reductions and revenue increases."
Translation: governments will continue to stare down the question of cutting budgets or raising taxes.
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