NCPA - National Center for Policy Analysis


November 22, 2005

Some states have begun to use budget surpluses to increase spending on Medicaid and other programs. According to USA Today, revenue growth for many state and local governments is the strongest in 15 years, giving legislatures billions to spend without raising tax rates.

  • State and local revenue rose by 7.2 percent in the first nine months of 2005, the largest increase since 1990.
  • Meanwhile, spending rose by 6 percent, the largest increase since 2001, according to the U.S. Bureau of Economic Analysis.

Some states have used budget surpluses to expand eligibility for Medicaid. For example, Illinois has enacted a program that will subsidize the cost of health insurance for uninsured children in the state.

However, Arkansas Gov. Mike Huckabee, chair of the National Governors Association, said that states should use budget surpluses to restore funds for future needs. Huckabee said, "A lot of governors are nervous, even with the surpluses, because nobody wants to go back and make big cuts in education and Medicaid that we saw during tough times."

Source: Dennis Cauchon, "After years of scrimping, it's states' time to spend," USA Today, November 18, 2005.

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