2011 Shapes Up to Be the Year of Difficult Choices for States As Federal Stimulus Funds Expire and Revenue Shortfalls Persist

The Bloomberg BNA Tax Management Weekly State Tax Report filters through current state developments and analyzes those critical to multistate tax planning.

Coming out of the worst recession since World War II, states in 2011 will continue to grapple with revenue shortfalls, even as their economies recover and revenues are growing. Widespread unemployment has generated so much demand for services that modest growth in revenues is insufficient to cover the costs. Thus, budget shortfalls are expected to persist well into fiscal year 2013, according to various sources. At the same time, pressure on elected officials to avoid tax increases remains as intense as ever. The result for states is that 2011 may be the most difficult budget year of all, forcing governors, legislators, and administrators of various state agencies to revisit the fundamental question of what constitutes an essential government service.

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