Impact Of The Debt Debate On The States

: Chris Lee Law Firm

  Filed under: News

state budgetThe debt debate has been the hot topic for weeks now, every news channel is combing through the details with an eye of scrutiny. The truth is, many people have no idea what the future holds for the nation’s economy, and many more have no idea that the aftermath could hit close to home in many ways. All states receive federal money to help fund their programs and pay their bills. If the nation defaults, the rippling effect will hit every state in a way they are not prepared for. Even further, if a debt deal is reached, each state is likely to both gain and suffer in very unique ways.

States In Preparation

Each state depends on federal money to fund major programs such as health care, unemployment, education and transportation.  With a significant portion of their funding on the line, many states are hoping for the best, but preparing for the worst.

The states that rely heaviest on federal income are the most vulnerable and include Maryland, South Carolina, Tennessee, Virginia and New Mexico. California is following closely as they are already in the midst of their own economic crisis, with unemployment hitting a double digit high. Any cut in federal funding could push California into further into debt with private investors. Texas is maintaining a positive attitude despite the fact that nearly one-third of their budget is federally funded. Much of the aid spent in Texas goes directly into agencies, such as the Health and Human Services Commission.  While Texas remains quiet in the planning stage, many other states are making plans to reorganize funds in hopes to ease the blow to certain programs if their federal funds are cut.

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