level and does happen on a regular basis but when we get to the catastrophic events large populations of sex the whole country, the economy of the country, the people so it is something that keeps us concerned and consistent basis. >> just for comparison not to be a dead horse with but as a senator from louisiana and the spokesperson for the gulf coast on this issue i have to say that with the terrorist attack in new york which was a horrible and totally different kind of event but there were in confine number of buildings that were destroyed in a very confined space and while it was a disaster that rocked the world 99.9% of the

people on that night or home and our own homes and there was a small percentage of people zero led by rudy guiliani and all the rest of a very small group that were focused on this particular thing, hands-on bowl world watched, but that night in new york and new jersey and connecticut. almost everyone who is in their own debt to. that is the difference between a happened there and what happened in katrina were that nine of the storm 2 million people were summer other than their own bedroom and i don't think the country understands what is going to happen if this happens in new york or new jersey or

connecticut or pennsylvania, virginia, any place and i think that people think they are not going to be impacted by category five hurricane. i think they think they built building strong enough to withstand them but i beg to differ so who will continue to make my voice heard to the president and the leadership and hope that we get through this storm season without facing a category three, four, or five and a major metropolitan area, not that orleans on dallas and houston, but in northeast metropolitan area has a lot more than city than even we do long the gulf coast because the numbers are staggering and i know janet. >> i do want a, first of all, thank you for your sense of emergency and i want to give an update regarding this critical

issue of the urban parts of the northeast. new york city has excellent coverage of 211 but because of the economic condition of many in our state specifically new york state has had to cut their funding of 211 so you are absolutely on point as you talk about the urgency in those areas and the other, make any notice so vividly that what you did an outstanding chart that shows 73 percent growth call volume in a two-year time, i think the public needs the 14 million people and during katrina those are people on whose lives were being saved by the volunteers and staff. we did rooftop rescues, we did connecting people to the inappropriate governmental entities and the most vivid example happened with someone you know quite well and took a

call from a man who went back to his home and found his mother's body. there was no one for him to call but 211 and i figured nc to continue this funny and legislation speaks to the need of american people now want to thank you for that. >> thank you very much. in closing comments? >> senator, i want to add things to it, having spent a few years doing this and gone pretty good at realizing there's not a lot of advocacy on the hill, consistent advocacy on disaster response and recovery. and to your .1 of the things we have seen with the vatican is initiative is annoying are focused on hurricanes, that is your geography and constituency, one of the biggest threat to face, but over the course of the last 60 days have to shake in the los angeles region now we have had his care of pandemic and i think the one recognition and a one thing i strongly encourage you to do is let's

ming this about the need for better capabilities to do with catastrophic events particularly housing in respect of what the causes because as the senator pointed out is more concerned about tornadoes or whenever we're calling them are microbursts these days, and with that to make sure we're resonating the argument with the people he met thank you, and what i will do because i do want to support the point that you just made in the. i'm going to call a hearing for earthquakes particularly and i want to show a film in this committee of what is going to happen when an earthquake hits not just california by memphis which is a target and i'm going to use the risk assessment that has been done by our risk managers to show the like a disaster is based on the scientific information and this

is what our government and scientists and leaders believe is probable to happen and what this committee is going to do is to try continuously to show those probabilities and adapts to respond to what we are predicting is going to happen and as we work every less are other priorities and the government. this is not the only party of the government but having represented people who lived through it and survived to a catastrophic disaster it's hard to tell them that there's another priority and that is what's going to happen here over the two or three or 5 million or 20 million people that are caught up in it at the time it happened it's very hard to tell them that there is a higher priority than giving them a meal, a shelter from a potential job, a place to return and

becomes a very innovative issue for any country whether china or india or other countries that we have seen go through it terrific catastrophic disaster. it is just a matter of time until some of these positions have been. i like to say we're ready but we're not in any number of places we have heard today so thank you all. i think we will call the hearing to a close and again the record will remain open for 15 days and we urge anyone either here or listening to submit any data that will be helpful to our committee and we thank you very much. a meeting adjourned

the national governors association says states are raising their steepest budget cuts in 30 years spending projected to fall for the second year in a row. this is a little more than a half hour. >> good morning and welcome to this goal of survey of states conference call, at this time and all participants are and listen only mode and later we will have a question and answer session. i will turn the call over to

scott pattison, you may began. >> thank you. i am scott pattison, executive director with the national association of state budget officers and with is mr. scheppach the, of the national governors association and today we are releasing our fiscal report which we do twice a year. we have been doing this report for well over 30 years now and unfortunately i have to report that these are some of the worst numbers we have ever seen. for example, the first time ever actual spending for the states is going to decline. this fiscal year 09 and fiscal year 102 years in a row. the last time this occurred and the only other time the state's actually had an actual outright decline in expenditures was in 1983 and ousted so little below

the line of 7%, let me give you some numbers. state spending is estimated to decline 2.2% in this fiscal year 09 which i think everyone knows and for at most dates of the end of this month on june 30th. ratan we have projected the state expenditures will have and i'll write decline of 2.5% and again that a significant both because this is two years in a row for the first time and also because the numbers are much more significant in terms of decline in the only other to find which was 93. thirty states estimate that there 2009 budgets will be --. only 64 -- 408 to give you a little bit of perspective in comparison and 2010 expect 35 states will have -- budgets and other words the year over year will be spending less intense

than they did the year before then they did in 08. one indicator of fiscal stress that is very good is the actual cuts made to budgets after passage to another words after the governor has signed the budget and there is a chart that shows in these but these are fairly and to have a record for the first time and other 42 states in this particular fiscal year will have gone back and have had to cut after passage of the budget. the last time that we saw significant cuts or two years in a row the post 9/11 recession of 02 and 03 and as you can see from the chart 37 states in auto and 37 and 03 and actually went back and cut the budgets following passage and signing by the governor. again fairly significant we're up to 42 for this. to put that in perspective last

year fiscal year 0813 states had to go back and cut the budget after passage so we seen a fairly significant change in one year's time and i think the other thing i want to emphasize is that this report demonstrates how quickly the decline in the state fiscal situation has occurred while the last one to fiscal years especially indicators like that when you can't 30 -- 13 states cut after passage denali and now up to 42 for this year. let me say a few words about the budget gaps, the shortfall so the states experiencing. there are a large majority of states facing shortfalls from a chart on those 36 states have had to close gaps already during this particular fiscal year 09. we still have 20 states that still closing gaps and have additional shortfalls. in addition to that for 2010 we

expect 37 states to have budget gaps. on out, that may grow in 2011 and is very difficult to project that far ahead for fiscal year 11 for states but so far 24 states are reporting that they do have budget gaps expected in 2011 so about half the states and 2011 expect a budget gap and i would expect that that would grow also. let me talk about revenue collections in this report. no surprise to anyone that revenue collections are down significantly in all sources of revenue. there are numerous reports recently just finishing up the spring collection for states that have demonstrated both anatoly and otherwise where significant declines with the state's. currently what we're seeing in this report is an overall aggregate 6.1% decline year over year in state revenues in the three major sources of revenue,

that a sales and personal income and corporate income tax. in 2009 the current fiscal year revenues exceeded expectations and only two states, wyoming and north dakota which tended to be anomalies and we have budget gaps where forecasts were not met in 38 states and in and out not be surprised as in the fiscal year for most on june 30th if that might grow. specifically sales tax collections or 3.2% lower, personal income tax collections 6.6% or in corporate income tax 15.2% lower amid this fiscal year over the last minute and again unfortunately i believe based on very recent anecdotal data that those numbers may understate the decline in the tax revenue situation for states and the end of this particular fiscal year. let me finish up with his

reports conclusions on bounce levels. bounces are rainy day funds coupled with an of year balances, another very good indicator of fiscal health state level and what we have seen is they are down but is still lagging in terms of the fiscal situation and what i mean by that is that look a little better than the actual fiscal situation. web we see it bounces off firmly over 5% of state expenditures. that is a fairly significant decline from about 9% last fiscal year 08 and well over 10% year 07. although i want to put these bonds levels and perspective there are a couple things going on. one is that states don't tend to tap the entirety of the rainy day funds immediately so you expect those would still exist but interestingly texas and alaska account for almost half

of about 40 percent of state vance as in their totality so if you took those out to have lower bounds calls. now some states i should mention i'm beginning the process of turning their funds so i expect some will be at zero. this report unfortunately shows the fiscal situation based on as long as we have been doing this is one of the worst in decades and whether we have growth but is another 2011 or 2012 raven 2013 will depend on the severity of the recession. in addition to many factors so with that in further explanation i will turn over to the executive director of the national governors' association dr. raymond scheppach. >> i just want to do two things, number one, talk a little bit about the relationship to the

recovery package to these particular numbers and then second just stress a few of what i would call takeaways our bottom-line numbers. in terms of recovery package it was a total 787 billion, and that about 246 billion actually came to states or through states in terms of entitlements to individuals. of that total 135 billion whizz relatively flexible for states and that came out of into categories, the first 87 billion in medicaid. not that the federal money was flexible but allowed states to take the previous month to do and use that to plug holes in other places. the second piece was the so-called states civilization which was 48 million which went to education and because education totals about 30 percent of the average state

budget was a lot of flexibility in there as wow. the remaining 111 billion was very specific in terms of categories to essentially a move that money around in a chorus provided the flexibility because economists often said the budget requirements states during periods of this due process local activity makes the downturn in deeper and longer. and when i look at the recovery factor is very positive number of standpoints both for the states as well as the economy, the 135 million was a high percentage of the total that came to states that is flexible which was really a pause. the money came in the two areas in the governor's generally tried to protect in terms of

budget cuts so basically education and health care and unlike most previous fiscal packages and there are always too late it looks like this one was, in fact, in time investing in a number of states where they put cuts on hull's with the bottom line is this downturn from a state perspective would have been worse if we didn't have a recovery package however, the economy has continued to deteriorate in spite of the recovery package which is leaving us in such a deep hole. a couple of other comments i want to make with respect to the decline, first is clear that we have got two possibly three years more a very difficult time when state perspective of and if you look at this chart really what states have said is their shortfalls over the last three

years, about a month left in 2009 and 10 and 11 is $183 billion which is huge from a historical standpoint. i would personally argue ministates indicate we have a shortage in 2011 but couldn't give a number so crystal ball would give a range that my sense is the bottom line probably between 200 and to order 50 billion in terms of deficits over the next three years. if you talk about the middle of that range that is on average 75 billion breyer of the next three years and if you compare that to general fund revenues which are about six and a 40 billion that says essentially 11 to 12% close that is necessary per year or the three

years. second, and today again that the spending the way i look at it scott mentioned we are down to another 2.5%, about four 1/2% of the two years and general is up 6% breyer was a you can see going down 2% is a huge cuts relative to the long run. third point is in the budget states are recommending that taxes for 2010 really are increase by 24 billion. if you look historically we have seen numbers of times a fourteener 15 billion but never in number of that broad a magnitude and unfortunately as they go on i think we will continue to want to cut budgets but are going to be forced to look unfortunately on the

revenue side. most of this problem has come on the revenue side and even medicaid has been somewhat under control. if you look in detail this is significant number of states that assume revenues damaging 10 and 20% in terms of personal income tax revenues and actually for five states over 20 percent so huge revenue office. the only other comment i would make is we're also headed for a cliff that at some particular point and slight december 2010 which means some time after that when the money goes away in the economy has not recovered enough we're going to have another pretty significant problem to address. is a time when you want to build a rainy day funds and prepare

for that but given the situation there is very little ability to do that. is interesting even to compare this, scott mention back 21983 in terms of cuts but it is interesting when you look at it that was one year down seven tenths. 1982 going into that you're spending grew over 6% in coming out of it on the other side 1984 spending grew 8% so as bad as that was we were down and out of a relatively quickly. this one is going to be deeper and much longer so you're not going to have the capacity to build revenue base going forward. so with that what we open it up to questions and thus hold on the conference call and see whether there are questions in the room. >> two what degree are these

problems concentrated in california in michigan? >> i would say these are pretty broad and. those states are probably in the category of some of the worst, florida and nevada, rhode island, a number of others in that category but you have a whole bunch of others that are close to that. i think when you look at the other side we ought to move to north dakota because it seems to be the only state that is doing well but the only states doing well are no dakota, wyoming to the states that have had an energy base the when you look at the number you have over 20 states of personal income tax losses between 10 and 20% and that means it is pretty broad. >> i want to add it is interesting to us because if you look at the mid-70s when the early '80s and '90s is still

have a fair amount of states anywhere from six to a dozen doing fairly well primarily because of energy in this is very different and very universally exception of very small handful of states like wyoming and north dakota. you see us across the country in every region whether economy.com, philadelphia federal reserve, any data shows basically universal virtually 50 stay downturn. all. >> bond financing, will states shy away from it because they are expecting lower revenues or will they turn to bond financing to fill the gaps? mack i think it is going to be depending on the states, i think the overwhelming majority of states will probably do what they would normally do in this type of recessionary time it to the extent they can turn to bond financing. i think there are a handful of states frankly some of the

larger states on is the california that will still utilize bond financing but they have their own their difficult issues that they have to deal with to ensure they can continue with the we have never seen a state default. you saw some transportation bonds default and the '30s so states are still an exceptionally low risk and investment and so i think investors realize that and i don't expect that to be a big issue. >> anything else in the room? >> if you look at and i appreciate the a 12% of the budgets here, if you look back into the 80's and '70's as a percent of the budgets is this on a scale you haven't seen or

similar to the state budgets or smaller? >> i was a we don't have statistics back to the 30's but you've got to go back there. i think this is the worst thing we have seen and most people when you initially it then downturn thought it would be similar to 83 and from what i've seen again we were down in 83 with the year before and the year after we had very good revenue and so we're back for a quickly. this started december 2008 so we're into this a wow. we have to three more years ago so i think it is really the death and the length of this. there is no capability to build the revenue base and a rainy day funds on the defense of the entire kind ..