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August 12, 2009 (LPAC)-Lyndon LaRouche called for a Federal provision of $150 billion to the states and localities by September, during his Aug. 1 LaRouche Political Action Committee webcast, in which he outlined emergency steps for a new domestic and international credit system to rebuild the world economy. These are the measures that desperately must be implemented, if state and local governments are to survive.

Although many states were able to pass some kind of budget for the new fiscal year beginning July 1, at least 12 of them are already in the red by an estimated $24 billion. Fully 30 states are already on course for big FY 2010 budget gaps, as revenue continues to collapse. These and other quantifications have been put out in new reports from the Center on Budget and Policy Priorities, the General Accounting Office (GAO), and various state associations. At the rate they are going, the states will rack up a combined budget shortfall of $350 billion over the next two years, according to the Council of State Governments — but that rate, of course, will not stay constant.

Payless, and Workless Workdays

States are implementing all kinds of maneuvers to keep together a workforce.
* In Michigan, all state offices closed last Friday, for the fourth of six furlough days for 37,000 state workers. There will be two more furlough days before Labor Day.

* In Pennsylvania, most of the states' 77,000 workers got their first pay yesterday and last Friday, since July 1, the start of the new fiscal year, for which there is still no state budget. A "stopgap" budget measure was signed last week, mostly for the purpose of issuing paychecks, but Gov. Rendell and the state Senate and House are at an impasse on concluding a comprehensive agreement. While state workers went five weeks with no pay, they were given the option of taking out interest-free loans at a group of participating banks.

In Philadelphia, up to 3,000 city workers, including 900 policement, will be laid off, if the state doesn't act to approve the city's right to increase a sales tax in order to meet its payroll. Philadelphia wants the right to an 8% level (6% is the allowed level in all cities, except for Pittsburgh's 7%). State approval could be delayed for weeks, at the same time that the ability of Philadelphia residents to pay the tax is also sinking.

* There are "worker buy-outs"—i.e., job terminations—in at least six states, to cut costs. Incentives were offered to cut payrolls for a combined 9,000 workers in Vermont, Maine, Louisina, Oklahoma, Connecticut, and New York. Meantime, 54,000 state workers have been laid off since the beginning of the collapse, according to the American Federation of State, County and Municipal Employees.

Cuts in Public Health, Medical Care for the Poor

At least 21 states have cut health programs, and many have cut specific safety-net services, from homeless aid, to HIV/AIDS treatment assistance. California is in the lead, where the Children's Health Care Program (CHIP), was cut by 44% in funding from its prior budget year. On July 17, enrollment of children was frozen in the CHIP "Healthy Families" program. Within only two weeks, there was a waiting list of over 33,000 children appealing for coverage.

Nationally, the Federal stimulus infusion of $87 billion kept the states' Medicaid programs from disintegrating this Spring and through June, but now doomsday is ahead with no funding. At least 15 states have announced cuts in their Medicaid programs of all kinds for 2010 and 2011 fiscal years.

For example, in eight states, Medicaid care considered "optional" by Federal standards, has been cut: Washington and Colorado are reducing care for the disabled; Nebraska is limiting mental health care; California, Michigan and Utah ended adult dental coverage. The list goes on.