GAO Warning: Huge State, Local Budget Deficits Loom

Published October 1, 2007

State and local governments will have to raise taxes 17 percent or cut spending 14 percent to keep their operating budgets in balance over the next decade, according to a report issued July 18 by the federal Government Accountability Office (GAO).

The report says soaring health care costs will be the driving force in throwing state and local government budgets out of balance if something isn’t done.

The report assumes present-day policies will continue. It projects structural deficits by 2017 and worsening problems thereafter, with a collective state-local government deficit of $11.5 trillion in 2007 dollars by 2050.

Steve Stanek