States Find No Easy Solutions For Budget Woes

By Joetta L. Sack and

Last summer, Tennessee residents staged a rambunctious protest outside the state Capitol in Nashville to decry efforts by state leaders to raise taxes as a way to shore up a growing budget shortfall and finance the governor's plan for statewide preschool.

After weeks of negotiations, the legislature, banking on an economic rebound, rejected Gov. Don Sundquist's demands for new taxes—as well as his preschool plan—and instead tackled the crisis with some tricky budget maneuvers and by spending most of the state's revenue from the legal settlement with the nation's tobacco companies.

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