States grow anxious over fiscal cliff stalemate
Tuesday, December 11, 2012
A plunge over the federal “fiscal cliff” may sound like a terrifying risk for many state officials anxiously watching as Washington struggles to avert automatic tax hikes and spending cuts set to start with the new year. Yet their greatest angst may stem not from the potential loss of billions of dollars, but the confusion surrounding it all.
The longer the White House and Congress remain at odds, the more difficult it becomes for governors and lawmakers who are trying to piece together their own budgets. Many states depend on federal grants to help finance education, environmental and community programs that are on the chopping block. Their economies are powered by military bases and defense contractors that could get whacked. And their state income tax revenues could rise or fall as a direct result of federal tax hikes.
All that of that is to say that states have a lot riding on the strained negotiations between national Democrats and Republicans over some way of raising revenues and reducing spending that would avoid a more drastic deficit-reduction plan, known as the “fiscal cliff” because it could send the country back into an economic recession.
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