States' Financial Stress Eases, but Struggles Persist

States’ financial straits have eased with the passing of the worst of the recession. However, the states still are struggling with poor economic growth, reduced federal aid, and local governments needing handouts, The Washington Post reported.

The information is included in a new report from the National Governors Association and the National Association of State Budget Officers. The Fiscal Survey of States found that while states are contending with slow revenue growth, they are also being forced to spend more to deal with such things as high unemployment, the Post reported.

“State budgets are certainly improving; however, growth is weak, and there is not enough money for all the bills coming in,” said Scott Pattison, executive director of the National Association of State Budget Officers. “State officials will still be cutting some programs, and increases in funding for any program except for health care will be rare.”

The report found that Medicaid is the biggest financial burden on the states because of increasing caseloads, rising healthcare costs, and reduced federal help. Officials in more than half of the states expect budget shortfalls in their Medicaid programs, the Post reported.