April 26, 2010
Public costs of recession
The personal and business losses associated with this recession have been very high, but perhaps not as well appreciated is that government, particularly state and local governments, have also suffered losses.
Dr. Mike Walden, North Carolina Cooperative Extension economist in the College of Agriculture and Life Sciences at N.C. State University, responds:
"In terms of tax revenues, if we look at our state of North Carolina between 2008 and 2009 revenues from the individual income tax -- this is for the state collected in North Carolina -- decreased, decreased by $2 billion.
"Revenues from the sales tax: They had sales tax down $250 million, and revenues from the corporate income tax down $300 million.
"Now again this should all make sense if unemployment is high, or even people who have jobs are not spending as much or their incomes are down, that is all going to affect public revenue.
"Now at the same time state spending for some key programs go up during a recession. For example state spending for unemployment compensation has virtually doubled over the last year, and state spending on Medicaid goes up about $1,000 for each unemployed worker.
"So this is the big reason why our state is probably going to continue to be challenged fiscally in the next fiscal year."
Posted by deeshore at April 26, 2010 10:11 AM