Hi everyone, this is Dr. Nitin Chhoda with Ignition Time. In this video i'm
going to answer the question Are states actually struggling and
starting to cut back on expenses and how this impacts
residents? Now we talk about the unemployment booster we talk about
the $300 a week but all this is on top of the state unemployment insurance. So the
state has many many many expenses education,
health care, maintenance of local services and all the other services that
we essentially take for granted. On top of that the state is now expected
to pay out unemployment benefits and coordinate with the federal government
to get the extra money and pay it out. So the fact is states now are
underfunded and states have to cut corners somewhere. In fact there's a very
real possibility that some states may actually run out of
money. Now there are provisions for when states
run out of money they can borrow money from the federal government.
But for now let's focus on what's exactly going on with states. And on your
screen you'll see an article from the center on
budget and policy priorities. And the article had the headline reads
States grappling with a hit to tax collections. In fact CBPP estimates
that state budget shortfalls will ultimately reach
almost 10% of the 2020 fiscal year and over 20%
in 2021. That's what states are running into. In fact
states face an immediate fiscal crisis in 2020
and we'll know the full extent as and when the actual numbers come out but
basically what's happening is Kansas has estimated $816 million drop-in revenues.
Arizona expects revenues to drop by $864 million.
Arkansas expects a $353 million revenue drop and many many states
are seeing significant cuts in revenue. In fact damaging cuts
have already begun in Georgia, policy makers approved a 10%
cut for 2021. And if you want to get an idea of the state revenue shortfalls
take a look at this chart on your screen and as we scroll
you will see how the pandemic has caused revenues to decline
across the country. A significant decline in revenues
for all states throughout the country with some states actually being impacted
significantly more than others. Speaking of states
that are significantly impacted, here's here's an article on your screen
from the Washington Post and this article reads New York city battled back
the pandemic. Now it's struggling to pay for it.
New York city is running a severe shortfall and as of Monday of this
week about 22,000 municipal workers could
receive pink slips informing them that they will be laid off in October
unless New York city can identify other ways to help close its approximately
$8 billion revenue gap. And if you look
looking at this article a little more closely without a $12 billion cash
infusion MTA leaders sounded their own dialogue
they may have to scale back some services
as much as 40%, leaving riders facing longer wait times
and postponing solely needed repairs to the subway infrastructure.
Now here's another article on your screen and this one is from New York
Times, it says state and local budget pain looms over economy's future. And it
says providing more aid to states and local governments
has become one of the biggest issues uh tangling up the debate over another
pandemic rescue package as you know house speaker nancy pelosi
wants aid for state and local governments to the tune of
right around 900 billion dollars and it seems like that's a huge
huge area of contention between the democrats and the administration it's
one of the many things that have stalled the current stimulus
negotiations also on your screen you'll see another you see an article
from the tax policy center and the very first
question that says what are state balance budget
requirements and how do they work so basically every state
i should say most states have to balance their budgets which basically means cash
in is equal to cash out and so states
simply can't balance their budgets because they're seeing a significant
decline in their revenue think about it if you
get less money coming in and this is you know how we run as if how families
run how businesses run states run in a similar way
if you have less money coming in you've got to have less money going out in
order to balance your budget so that's another
crisis that's facing states right now in fact
if you take a look at this article on your screen this is an article
that was on the gainesville daily register
and this article says that lawmakers complained state park fees
hurt poor residents in oklahoma so what's happening is we're starting to
see the we're starting to see the the
problems with the system if you will if states
don't have enough funding in fact let's take a look at this article from
jersey and this article says jersey budget proposal calls
for eliminating racing subsidy now obviously every single state
has its own areas of you know they spend money in different ways there's
definitely waste in any system there's waste in any
business there's waste in our personal household
so states now need to find ways to eliminate
the waste because states simply can't collect less money and continue
to spend the same amount of money something has to give which is why
states are now going to start making adjustments states are going to
have to start cutting back on certain expenses
in order to be able to make budget in order to be able to balance their budget
i want you to tell me in the comment section below have you seen some
impact from the from the kind of services or from what you expect from
your state in your particular state have you seen
have you seen delays in getting a response from let's say if
you call if you call any state agency which i'm
sure we have because we're talking about unemployment benefits on our channel but
have you seen any other things have you seen
local parks that are not being maintained anymore are you seeing that
there's a there's a reduction in response there's a there's an increase
in response time when you when you try and talk to law
enforcement have you seen any impact in your actual state
let's uh you know let's let's try and understand what's going on because i do
believe that in the comments section we learn a lot more about the real
status of the country and i do believe the collective insight
of our incredible community of our amazing rapidly growing community
is much greater than what i can individually tell you because i do want
to i do want us to interact and learn from
each other the fact is states are facing a budget shortfall in
fact once again let's show you the chart on your screen from the cbp website
which actually shows you all the states that are
running budget shortfalls now if you're in any one of these states
specifically the states that have a higher budget shortfall specifically the
states that are going to see a significant decline in revenue i'm
talking states like new york states like california you are likely to see some
sort of a cut in the way your state spends money which
in turn is going to directly impact you and the services that you have come to
expect from the state remember states spend money
on education primarily k-12 they spend money on
local health care services they spend money on the services we've come to
expect like firefighters law enforcement and many many other things so again we
are going to see some sort of a compromise
in those services because states are simply not making budget
unless the state gets aid from the federal government because states can
actually borrow money from the federal government a lot of
states actually have borrowed money from the federal government in order to
be able to stay afloat and pay their bills which by the way explains
why states are not able to pay the 100 a week booster
on top of the 300 a week that is allocated through the drf fund
through the lost wages assistance program through the executive order that
was set up by the president that also explains why
states are simply struggling to even distribute the 300 a week program
because states are overloaded and underfunded and now they have to set
up a new program with new architecture they have to make sure that they comply
with all the rules and regulations in order to be able to distribute this
money in an efficient manner and they make sure that they do it
within the letter of the law because each
state has its own requirements each state has its own formula
for these calculations so imagine if a state
is expected to do more work and on top of that the state is
underfunded because the revenue is coming into the state
from the state tax revenues remember when you go out to eat at a restaurant
when you use public transport that's when the state makes money in
addition to your state income taxes but now if you're not going to go out
and eat at restaurants if you're not going to go out if you're not going to
be doing things that bring the state money if you're not
going to be using public transport and if essentially there's a reduction
in the slowdown in the economy the state now
has the state now struggles to get money which means
the state has to make cuts elsewhere let me know what you think
i would like to know if you again if you've seen a compromise in
your state services please type out in the description section below
let us know so we can help each other as a community my name is dr nathan choda
with ignition time thank you so much for watching i have the privilege the
honor the fortune of living the american dream and i want to help you
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thank you so much for watching my name is dr nitin choda with ignition time
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