A new report from the State Budget Crisis Task Force, headed by Richard Ravitch and Paul Volcker, points to deep sustainability problems for state governments long after the economy recovers (may that day come swiftly).

From the Wall Street Journal:

Rising pension and health-care costs are hampering states’ efforts to improve infrastructure and provide college education to lower-income students, according to a new task force.

The Task Force looked at six states – Virginia, Texas, New York, New Jersey and Illinois – though the problems they identify are common nationally.

As the New York Times reports:

The report arrived at a delicate political moment. States are deciding whether or not to expand their Medicaid programs to cover the uninsured poor as part of the new health care law — an added expense some are balking at even though the federal government has pledged to pay the full cost for the first few years and 90 percent after that.

I wrote about the Medicaid expansion yesterday. Here’s what the Task Force says about projected spending.

Medicaid, the single largest spending category in most state budgets, is growing faster than the economy and faster than state tax revenues. This trend will continue as long as health care costs grow faster than the overall economy and Medicaid caseloads continue to increase. According to the federal Centers for Medicare and Medicaid Services (CMS), total Medicaid costs are likely to grow at an average annual rate of 8.1 percent between 2012 and 2020 if the health care reforms in the Affordable Care Act (ACA) are implemented and at a rate of 6.6 percent if they are not.

Keith Hennessey identifies seven reasons states may hesitate to take on the expansion.

At the Washington Post’s Wonkblog, Sara Kliff looks at some data. She includes this chart, which neatly summarizes state budget problems.

Adding to today’s outlook, Federal Reserve Chairman Ben Bernanke raised a question we would have hoped he could answer now.

The crucial issue, he said, is “Whether or not there is in fact a sustained recovery going on in the labor market or are we stuck in the mud.”

The Gallup Poll tells us what most people think about it.