In addition to deep spending cuts, legislators are enacting or considering higher fees for public colleges, new tariffs on everything from soda to strippers, and other measures intended to offset shrinking revenues from sales, real estate, and income taxes.
"This is shaping up as the worst year for the states since the [Second World] War," said Arturo Perez, a fiscal analyst for the National Conference of State Legislatures.
In California, Governor Arnold Schwarzenegger's administration yesterday issued its latest plan to close the state's $41.6 billion budget deficit, calling the state's declining fiscal health "a major crisis."
State finance officials say California will run out of money sometime in February and will have to start issuing IOUs to employees and contractors - and to taxpayers in line for refunds. The proposal calls for $14.3 billion in tax increases and other new revenue and $17.4 billion in spending cuts over the next 18 months. It also relies on borrowing and a plan the Legislature approved in early 2008 to sell bonds keyed to the future value of the state lottery.
In New York, which has projected $15.4 billion in deficits over two years, increased fees on sugary soda and Internet downloads are among the 88 new or increased charges Governor David Paterson has proposed. Paterson also has proposed slashing aid to schools and cutting the state work force by more than 3,000 jobs.
In many cases, programs already hit by cuts can, at best, expect these reductions to stay in place through fiscal year 2010. That is because lawmakers crafting budgets typically allot the same amount as was committed at the end of the previous year.
Forty-one states and Washington, D.C., faced combined budget gaps exceeding $42 billion after fiscal year 2009 spending plans were approved, according to the Center on Budget and Policy Priorities. The situation could be almost twice as bad the following fiscal year based on early estimates 38 states provided to the center.
