It is no secret that, despite the slowly recovering economy, state and local governments are hurting badly. With stimulus money running out in 2010, many state and local governments find themselves in a precarious position, as they will be forced to make additional cuts or raise taxes in order to balance their budgets.
To that end, President Obama is pushing for more state and local aid. In a letter to Congress, President Obama is calling for increased funding for education and health care. However, the increased aid would unquestionably add to the national deficit, something many lawmakers are currently hesitant to do.
84,000 jobs have been lost from state and local governments in 2010 - since August 2008, that number totals a massive 231,000.
The past two year's have been very difficult for states, but they are rapidly running out of options. Stimulus money is drying up, one-time revenue boosts have been used and many rainy day funds have been depleted. Despite an economy that appears to be on the rebound, state and local governments appear to now be entering a new phase of their economic crisis.