State Fiscal Crisis: Implications for Low-Income Families

Two years ago, states were enjoying record budget surpluses, and many states were expanding their investments in low-income working families. Now almost all states are facing massive budget gaps. Revenues have fallen sharply, some expenditure items such as Medicaid continue to grow, and rainy day fund balances are starting to dry up. As many governors and state legislators grapple with how to balance their state budgets, human services programs are especially vulnerable. Spending for child care, job training, benefits for legal immigrants, and social services staff are among the areas that have been targeted in some states. These cuts may mean that many low-income families will not receive the assistance they need to continue working, or to meet their basic needs.

On Tuesday, October 15, the Brookings Welfare Reform & Beyond Initiative sponsored a public forum to discuss these very important issues and the implications for low-income Americans. A new paper by Brookings Senior Fellow Alice Rivlin was released. Researchers and state officials came together to discuss state fiscal trends, how states are dealing with the current crisis, and longer-term policy options and implications.