Many of the statements I will make here today you have heard from other sources. But, each year that we hear them and fail to act brings us closer to the precipice. My remarks are taken from a recent study commissioned by the National Education Association, our national parent organization. The study was conducted by Dr. Hal Hovey, one of the major experts in governmental budget forecasting. It is ironic that this meeting is being held at a time when the news about state finances is very good.
Many states have large surpluses.
As the federal budget moves into surplus, fears of federal aid cuts have been replaced with hopes of possible new and increased grants to states and local governments. However, a growing number of people feel that this period of economic prosperity is covering or masking a major problem. Structural vs. Cyclical Deficits Worries about the future governmental finance problems fall into two distinct categories. Cyclical deficits arise out of recessions. They cause reductions in the rate of revenue growth, perhaps even declines, at the same time that high unemployment drives up the cost of existing safety net programs.