If you needed more proof that states and localities will continue to seek ways to fill budget shortfalls, consider this: Despite the $48 billion in federal stimulus dollars provided in fiscal 2009, “states will continue to be fiscally strained,” according to a 163-page report from the U.S. Government Accountability Office released yesterday.
Under an American Recovery and Reinvestment Act of 2009 mandate, the GAO is required to track selected states’ and localities’ use of, accounting of, and plans to evaluate the impact of Recovery Act funds. Yesterday’s was the third such GAO report, measuring these factors as of September 11, 2009, when $48 billion of the estimated $49 billion federal funds had been distributed by the U.S. Treasury for fiscal 2009.
Of the five primary purposes for fulfilling these mandates by the GAO, the one that most informs any discussion on Sales Tax Buzz is the following, “To stabilize state and local government budgets, in order to minimize and avoid reductions in essential services and counterproductive state and local tax increases.”
That said, things don’t look good, not from the perspective of long-term funding for Medicaid, education, police, highway infrastructure, or other critical elements of state budgets. It’s worth a mention that the tracked states and localities hold 65% of the country’s population and are recipients of 2/3 of the Recovery Act’s dollars, providing a good cross section of state recipients as a whole. They are: Arizona, California, Colorado, the District of Columbia, Florida, Georgia, Illinois, Iowa, Massachusetts, Michigan, Mississippi, New Jersey, New York, North Carolina, Ohio, Pennsylvania, and Texas.
To see just how the Recovery Act funds are being used, click on Follow the Money, GAO’s Oversight of the Recovery Act, here.
Notwithstanding Vice President Biden’s praises yesterday that the Recovery Act, “is working to . . . cushion the impact of record state budget deficits,” the states are continuing to feel the strain. And that means it’s all but certain that we’ll continue to see an upswing in audits, pushing the outer limits of “nexus,” use tax patrols at state borders, and other clever ways to fill these gaping budget holes. 
Filed under: Legislation Tagged: | Avalara, GAO, Government Accountability Office, Joseph Biden, Recovery Act, state budget, state budgets
$48 Billion is peanuts when you consider it’s less than $1Billion per state. I’m sure more than half the states and every major city has an annual budget more than 50 or 100 x $1Billion!
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