High State Debt Loads Hurt Those Who Rely Most on Government Services

State budget pressures greatly impact the services that nonprofit organizations provide to states, as evidenced in a 2009 study by the Urban Institute.  The Urban Institute conducted a survey of over 30,000 nonprofit organizations that contract with state governments to provide services under a variety of programs, including welfare and social services. In the survey, nonprofits were asked whether late payments from the state were a ‘big problem,’ ‘small problem,’ or ‘not a problem.’ 

On average across the 50 states, 20 percent of nonprofits reported that late state payments were a ‘big problem’ in 2009, hindering their ability to provide services.  The chart above shows, on the x (horizontal) axis, the Truth in Accounting (TIA) measure of “Taxpayer Burden” for 2009.  This is a measure of state debt loads, including off-balance sheet obligations.  On the y (vertical) axis, the chart depicts the percent of nonprofits that reported late state payments as a ‘big problem.’ 

The general rule is, the higher the Taxpayer Burden, the higher the share of nonprofits who reported late state payments as a big problem. 

This result relates to another outcome of state budget pressures.  As Truth in Accounting (TIA) has previously reported, the share of doctors accepting new Medicaid patients also relates to the TIA measure of Taxpayer Burden.  A 2012 survey of states supports TIA analysis that indicates states with high Taxpayer Burdens tend to have fewer doctors willing to accept new Medicaid patients.  States encountering greater fiscal pressures, as evidenced by TIA’s Taxpayer Burden, have more difficulty paying doctors and non-profits that deliver state services.  In turn, government fiscal stress has led to reduced quality in government programs for those who rely on them most.

Truth in Accounting looks forward to Urban Institute’s latest research on this topic, which it expects to be published in the near future.