Despite economic expansion, states suffer lingering effects of recession

An issue brief this month from the Pew Research Center asserts that despite the current national economic expansion still underway, states are still coping with lasting effects of the 18-month recession that ended in 2009. Calling it a “lost decade,” the authors found that although budget pressures have eased in several ways, states still have not fully restored cuts in funding for infrastructure, public schools and universities, the number of state workers, and support for local governments. The report, ‘Lost Decade’ Casts a Post-Recession Shadow on State Finances, details 10 ways that states face a legacy from the lost decade, including foregone tax revenue, decreased state spending, and less funding for higher education.

The issue brief notes that even where overall state results have recovered, many individual states still lag behind — nearly a fifth of states collect less revenue that before the downturn and a third have smaller rainy day funds. If another recession were to hit before states fully recover from the previous recession, there may be permanently reduced levels of support for some state services, the authors caution.