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State Deficit

In: Business and Management

Submitted By Stephers82
Words 2134
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Introduction This paper will discuss the two main causes of state budget deficit; overspending and not enough tax revenue as well as the impacts states continue to feel from the recession. The paper will also make recommendations to resolve state deficit.
Overspending
Figure 1

Figure 1

Currently, government spending in many states is much higher than tax payers can sustain. A major factor to state overspending is the forgetfulness of state officials that the government is supposed to exist to serve citizens not the other way around. One state in particular, California, is a prime example of state overspending. Figure 1 demonstrates California’s Total Expenditures from 1995-2012. There are five main areas where the California legislature failed their citizens when it comes to spending.
The first area is their complicated institutional framework. Having a complicated institutional framework increases the cost of operating the government. For example, California pays for multiple administrators to do the same type of work in different departments. They also have additional administrators to coordinate the overlapping work of the different departments.
Another area where California fails is their lack of coordination for their health and human services, this lack of coordination results in the second largest source of California’s government expenses. There are 33,000 employees in the health and human services organization of the government, $83 billion is budgeted and $24.95 billion is used from the state’s general fund. (Storms, 2011) These funds are being spent, and there is no efficiency to the programs.
A third area is overspending in prisons. California spends about $47,000 per prisoner annually; this is 50 percent higher than the national average. The current prison population in California is still greater than 100,000 inmates. The…...

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