States and localities are facing mounting fiscal challenges.

While the extent varies significantly state by state, there can be no doubt the magnitude of the problem is great and extends beyond the impact of the financial crisis and lingering recession. In June 2011 Richard Ravitch and Paul A. Volcker assembled a Task Force to examine threats to near and long term fiscal sustainability in six U.S. states: California, Illinois, New Jersey, New York, Texas, and Virginia. While these states differ along many dimensions, including politics, policies, economies, and demographics, they share many of the same problems. On July 17th, 2012 the Task Force will release its findings, which highlight the following major threats confronting these and other state and local governments across the country:

• Medicaid Spending Growth Is Crowding Out Other Needs
• Federal Deficit Reduction Threatens State Economies and Budgets
• Underfunded Retirement Promises Create Risks for Future Budgets
• Narrow, Eroding Tax Bases and Volatile Tax Revenues Undermine State Finances
• Local Government Fiscal Stress Poses Challenges for States
• State Budget Laws and Practices Hinder Fiscal Stability and Mask Imbalances