Jan 30, 2017

State governments even more strapped than usual

Twenty-five state governments saw their tax receipts come in below expectations in 2016, the most since the recession, according to the National Association of State Budget Officers.

Rising income inequality, which lowers some income and sales tax receipts, combined with falling oil prices, have sapped states of much-needed revenue.

Why this matters: The trend is coinciding with a debate in Washington over Obamacare and Medicaid, a program that makes up the second largest expenditure in most state budgets. Cutting or block-granting of federal support for Medicaid recipients would further hamstring state budgets.

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