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Survey Finds State Budgets Grim

Nationwide, $50 billion Gap Looms, Says State Lawmakers' Group

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Budget conditions in states have gone from bad to worse, the Denver-based National Conference of State Legislatures reported last week.

States are struggling to eliminate nearly $50 billion in budget gaps this fiscal year, on top of the roughly $40 billion they’ve already cut out of their spending plans.

Thirty-one states still have budget deficits this fiscal year, which for most states is more than half over, the report says.

And the situation is predicted to get only worse for next year. As state lawmakers craft their budgets for fiscal 2010, 34 states collectively face $84.3 billion in shortfalls, and 24 of those face double-digit gaps.

"These figures are absolutely alarming, both in their magnitude and in the painful decisions they present to state lawmakers," Corina Eckl, the fiscal program director for the group, said in a statement. "The easy budget fixes are long gone. Only hard and unpopular options remain."

And making things worse, states typically take longer than the national economy to come out of a recession, she warned.

For fiscal 2010, states with the biggest problem—defined by the budget gap as a percentage of the general fund—are Arizona, California, Hawaii, Louisiana, Nevada, New York, and Washington. Nevada’s shortfall is a whopping 37.6 percent of its budget, while Hawaii’s is 18 percent. The other states fall somewhere in between.

In this fiscal year, more than a dozen states have already made cuts to education as their budgets have deteriorated because tax revenues are rapidly declining. California still has the biggest hole to fill this year, an estimated $14.7 billion, or 14 percent of its general fund budget. ("Budget Pain Dampening K-12 Efforts," Jan. 7, 2009.)

Vol. 28, Issue 21, Page 4

Published in Print: February 11, 2009, as Survey Finds State Budgets Grim
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