Report of the State Budget Crisis Task Force, Revised July 31, 2012 - Rockefeller Institute of Government: "States are grappling with unprecedented fiscal crises. Even before the 2008 financial collapse, many states faced long-term structural problems. Many economists believe that in the aftermath of the crisis, the economy will grow sluggishly for years as it works off the excesses of the credit and real estate bubbles and endures slow employment growth. Tax revenues are recovering slowly and remain well below their pre-crisis trends. Large fiscal pressures loom. The most important demographic force of the next two decades, the aging of our society, is upon us. The first wave of baby boomers is at retirement age. The medically expensive elderly population that is eligible for Medicaid will swell, as will the number of state and local government retirees to whom health benefits were promised. In addition, pension costs will rise as a result of earlier pension underfunding and failure to recognize liabilities, and investment earnings that have fallen below assumed rates of return. Internet shopping is eroding the states’ already-narrow sales tax bases. Some states face significant cost pressures for prisons and other spending areas. Extremely volatile income tax revenues bring seesaw swings in state revenues overall. States will suffer greatly if federal budget cuts eventually come their way. In some states, especially where the consequences of a collapsed real estate market persist and residents and businesses are still in trouble, local governments face especially severe fiscal challenges."