With a number of states still working out budget plans for next year, lawmakers are looking ahead to the cuts that are likely to take place when federal stimulus money runs out.
Many states have relied heavily on stimulus funds, with Texas allotting almost 97 percent of its stimulus money to help patch budget gaps:
Texas lawmakers, for example, have pointed with pride to the fact they kept taxes low, made modest spending cuts and built up a rainy day fund this year. But that was possible, the survey showed, because Texas used nearly all (96.7 percent) of its stimulus dollars to close its budget shortfall for the fiscal year beginning July 1, the highest percentage of the 25 states.
Other states, including Alabama, Iowa, Minnesota, Oklahoma, South Carolina, and South Dakota were also able to use their federal stimulus funds to avoid raising taxes or cutting state programs and jobs.
While the government has received criticism for several of its federal bailout plans—especially for banks—individual consumers should be reminded that when it comes to personal finances, it’s best to always be prepared and to know your spending limits ahead of time.
The average consumer won’t always have a “bailout” source like the government available, but starting a rainy day fund and building a financial cushion will allow you to rely on your own devices. As both lawmakers and citizens work to build back the economy, the important lesson to everyone is to learn to plan ahead.
