States Struggling With Reality After Optimistic Revenue Projections

December 22, 2009

The National Conference of State Legislatures (NCSL) estimates that state budget shortfalls totaling $28.2 billion have opened since current state budgets were passed, suggesting optimistic revenue projections, falling revenue, or both. 36 states have taken or must take action to eliminate these shortfalls by the end of the fiscal year.

Some highlights from two excellent Stateline articles on the topic (one and two):

  • Arizona is holding a special session to the consider Governor Brewer’s proposed sales tax increase. A proposal to close it with spending cuts failed by one vote.
  • Connecticut must cut $467 million from the current biennial budget.
  • Indiana Governor Daniels says K-12 education must be trimmed next, having been spared during previous rounds of budget cutting.
  • Iowa Governor Culver and Oklahoma Governor Henry unilaterally imposed 10% across-the-board cuts to state agencies. But Massachusetts Governor Patrick has been denied the authority to order spending cuts and must go through the Legislature.
  • Maryland Governor O’Malley, having raised taxes early in the recession, says further cuts will be difficult and more federal aid is needed.
  • Virginia must close a $300 million shortfall, after adopting a budget that shaved $1.35 billion from planned expenses.
  • Washington State Governor Gregoire proposed a spending plan in line with revenues, but says her budget proposal will include a tax increase to restore spending.

More on state fiscal policy here.

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