A new report by the National Governors Association and the Association of State Budget Officers shows that states will face another terrible fiscal situation next year. Economic growth has not risen sharply enough to offset the loss of federal stimulus dollars and greater citizen demand for services, especially healthcare.

One of the biggest problems is that "spending on Medicaid is expected to consume an increasing share of state budgets and grow much more rapidly than state revenue growth, resulting in slow or no growth in education, transportation or public safety."  After federal stimulus wore off, the states increased their Medicaid spending by an average of 29 percent this year, according to the Kaiser Family Foundation.  Even though about half the states have taken steps to control Medicaid costs, many budget officials believe they haven't gone far enough.

In the wake of the defeat of Ohio Gov. John Kasich's reforms limiting collective bargaining rights and requiring greater contributions for health care for public sector workers, the governor warned that towns and school districts were going to have to do their best to balance their own budgets because there isn't much state money to bail out localities that can't negotiate concessions from local government unions. That won't be easy. Government has been one of the biggest boom industries in Ohio for decades now and it was the cost of a swollen public sector that Kasich was trying to restrain.

A legislative victory against the forced unionization of home-based health care providers in Michigan may be reversed due to the efforts of Republican legislators.

This year's budget calls for the end of funding to the Michigan Quality Community Care Council, which collects SEIU union dues of home-based health care providers. In 2005, the MQCCC was setup to be the "employer" of independent contractors that provide home health services. With an official employer and a vote-by-mail union election that few participated in, the contractors became unionized by SEIU and the MQCCC began skimming union dues from the government grants that paid the contractors.

The Competitive Enterprise Institute is out with a nifty index of public-sector union power in the 50 states. Sneak preview: the results won't surprise you.

Since Lehman Brothers collapsed in September 2008, New York City, under Mayor Bloomberg, has operated under the illusion that ingenious public-sector management can somehow overcome the inconvenient reality that public-sector benefits are consuming the resources that we need to pay for public services.