The Great Recession may be over, but fiscal issues in many states are still dire. Public officials at every level of government are also struggling to meet budgets that have not expanded in years.

Even after seven years of recovery efforts, more than 20 states still collect less tax revenue than they did prior to the recession. And, for most of those states, there has been no opportunity to build up reserves. Some have increased taxes and fees just to maintain programs related to health care, education, transportation and public safety.

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A continuing weakness in the oil and gas industry is now negatively impacting tax revenue in many states. Texas is among them. According to the Comptroller, oil production tax revenue for fiscal year 2016 was $100 million lower than predicted in revenue estimates. Natural gas tax revenues were 33.6 percent, or $292 million, below what had been projected. Texas, because of a diversified economy, was able to absorb the hit but with significant discomfort.

That was not the case for other states. The oil and gas industry is a huge economic driver throughout the US.  In New Mexico, the State Land Office reported that through May the drop in revenues from oil and gas and other activities on state trust land has fallen 32 percent from the previous year. Declining oil and gas prices have resulted in job loss and a decrease in both gross receipts and corporate taxes. The state’s operating reserves have practically been wiped out.

North Dakota, the nation’s second-ranked oil producer, has seen oil prices drop by more than  half over the last year, with active drill rigs falling from 187 two years ago to around 30 currently. As revenues declined, state officials ordered a 4.05 percent cut in spending by government agencies. And like other states, lawmakers turned to North Dakota’s rainy day fund to help fill the budget shortfall, to the tune of a $497 million withdrawal.

Lower personal income tax revenues plus declines in sales tax and meals and rooms taxes left Vermont with $16 million less in revenue at the end of FY 2016. Lawmakers will face a budget shortage when they convene in January to address the budget. Earlier this month, economists predicted that Louisiana could face a budget shortfall of up to $200 million. Tax hikes are expected and state agencies have been asked to cut spending. Those changes were implemented beginning in July when the state’s new fiscal year began.

Even in states like Indiana, where a budget surplus of about $50 million was recorded at the end of FY 2016, there is concern. Tax revenues have fallen for the second time in three years. And, the state’s 6 percent tax on gas is not delivering as much revenue to state coffers because of declining gas prices.

States with budget shortfalls are trying to cut spending and increase revenues, but they are moving cautiously in an attempt not to make a mistake like Kansas did in 2012. Kansas reduced the state’s income tax hoping to provide an economic boost to the overall economy. It didn’t work. Instead, the state suffered budget shortfalls, downgrades in its credit rating and depletion of the state’s rainy day fund.

Critical public projects have been put on hold in many states. Some elected leaders have simply chosen to do nothing, hoping that bad or dangerous situations will get better in some unknown way. Others, however, have taken another direction. Elected leaders in these states simply decided that much-needed projects, especially those that impact critical economic drivers, cannot be left to languish. These public leaders have embraced collaboration and alternative funding options. They have aggressively pursued solutions in new and innovative ways.

One has to wonder if some public officials will soon begin to realize that moving forward in new ways is the quickest way to boost the economy of any region and it is definitely a pathway to job creation. Private capital is available from many sources and the collaborative efforts of public and private partners are normally structured for the benefit of citizens and taxpayers.

More than 30 states have passed P3/PPP legislation as the market for P3s in the United States has expanded. History corroborates the success that can come from collaborative efforts between public and private partners. It was successful P3 collaboration that rebuilt the nation’s deteriorating transportation infrastructure in years past. Jobs were created and the nation achieved global leadership status.  One has to ask “what’s stopping us now?”   

Mary Scott Nabers is president and CEO of Strategic Partnerships Inc., a business development company specializing in government contracting and procurement consulting throughout the U.S.


The views expressed by authors are their own and not the views of The Hill.