Social Programs Are Factors in States’ Falling Revenues, Survey Shows

State governments facing current or potential declines in revenues are being asked by Congress to spend billions on social programs and will have to dip into their reserves, cut other spending and raise taxes, state officials said Friday.

In their annual fiscal survey of the states, the National Governors’ Assn. and the National Assn. of State Budget Officers said many Northeastern states ended fiscal 1989 with balances smaller than they enjoyed at the end of the previous year.

Many other states closed out the year with ending balances higher than before because they had anticipated economic slowdowns that did not occur, the two organizations of state officials said.

Nevertheless, their report said, the states of the populous Northeast are often a harbinger of things to come in the economy as a whole and “the rapid decline in revenues in these states could portend downturns in other states.”

Raymond G. Scheppach, executive director of the governors’ association, said that “early indications are that a number of states (in the Northeast) are not seeing any revenue growth at all in the first three months” of fiscal year 1990.

The fiscal year ends on June 30 in 46 states, on March 31 in New York, on Aug. 31 in Texas and on Sept. 30 in Michigan and Alabama.

Scheppach said programs for catastrophic medical care will cost states an estimated $4.2 billion over the next four years, despite repeal and cutback measures currently being considered in Congress.

He said changes in nursing home laws enacted in 1987 will cost states an estimated $2 billion.

If Medicaid revisions being considered become law, states will have to find an additional $11.2 billion to pay for them.

“They (Congress) still want to do a lot of things and they don’t have any money and we are probably the easiest place to shift it to,” Scheppach told reporters.