The State Budget Crisis in a Nutshell

It's bigger than the pension crisis, where an aging public workforce is coming online for pension payments that were decimated in recession. It's also a straight-up revenue crisis. After four decades when revenue grew consistently at 6 percent every year, states are in the middle of a five year drought, Dan Balz writes.

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States would probably not return to revenue levels they enjoyed in 2008 until 2013 or 2014....

Once revenues return to prior levels, states will have unmet needs to deal with, plus the arrival of the new health-care law and the financial costs it will entail.

"When you put that all together and add health-care reform in the middle of that in 2014, we're in a lot of trouble," he said.

Scheppach sees no alternative to major cuts in education funding by the states. Higher education has already felt the pinch, but that is likely to extend to elementary and secondary funding, as well. "Basically, health care is eating our seed corn," he said.

Read the full story in the Washington Post.

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Derek Thompson is a senior editor at The Atlantic, where he writes about economics, labor markets, and the entertainment business.

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