On Tuesday, Dick linked to the State Budget Crisis Task Force report. As he noted, the report shows how states face structural budget problems that were only exacerbated by the recession. The report’s “major threats to fiscal sustainability” include Medicaid, underfunded pension promises, and state budget practices — topics that we’ve written about often.

Although the report looks in depth at only six states, it does a good job of defining the problems — most of which apply to all states. Some highlights:

• The Centers for Medicare and Medicaid Services estimates that total Medicaid spending for 2011-2020 will “increase by an average of 8.1 percent per year assuming full implementation of the Affordable Care Act . . . and by 6.6 percent if ACA is repealed.” That high level of growth, even without the ACA’s Medicaid expansion, “is considerably higher than historical growth rates for recurring state revenue, so the structural Medicaid gap will persist with or without Medicaid expansion.”

• The federal budget deficit will have to be addressed at some point, and some areas are easier to cut than others: “federal grants to state and local governments will be a primary target of federal budget cuts: Although such grants account for only 16 percent of federal outlays as a whole, they make up more than 40 percent of the discretionary portion of the budget likely to be targeted for deeper cuts.” Further, “Of federal grants to the states, Medicaid is the largest category by far.” (On this point, see Avik Roy’s post at Forbes today: “During the ‘supercommittee’ deficit-reduction talks last year, President Obama proposed reducing federal funding for the Medicaid expansion by $100 billion over ten years, with states picking up the difference.”)

• The report includes a good description of “the legal nature of the pension promise” in the section about how “underfunded retirement promises create risks for future budgets.” Pensions for public employees “enjoy legal protections that vary widely based on state constitutions, statutes, and court decisions that often restrict subsequent modifications.” The difficulty in making changes to these pensions that are significant enough to effect real savings conflicts with the “increasing awareness by taxpayers of the burdens being placed upon them to fund pension and benefit programs of public employees. Often these taxpayers, as private sector employees, no longer enjoy similar benefits themselves.”

• Lastly, some cautionary words: “It is human nature to prefer the present to the future. Governments display that time preference by promising now and paying later: if they can, they will underestimate liabilities, underfund annual costs, and take on substantial investment risks to make it look like promises will be kept.”