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Almost Half of US States Face Budget Crises

Almost Half of US States Face Budget Crises

The economic meltdown is drying up tax revenues faster than anyone expected, forcing 22 states to confront serious budget deficits. Some states already have eliminated jobs and services - and more cuts are likely, according to the Los Angeles Times. The new shortfalls, totaling at least $11.2 billion, come just months after numerous states enacted belt-tightening measures while writing yearly budgets. Officials also adjusted their revenue projections downward to account for the slowing economy. But in many cases, the actual revenue for the first quarter of the fiscal year, which began July 1, has proven to be even lower. The gaps "will almost certainly widen" as tax revenues continue to drop, according to the Center on Budget and Policy Priorities, a Washington, D.C., think tank that compiled the state data in a report this month. Economists and other observers fear the numbers may signal the onset of a historic fiscal crisis for state governments. "States have been confronted with bad economic circumstances in the past, but never so many states, all at once," said Bill Pound, executive director of the National Conference of State Legislatures. Rising layoffs are cutting into payroll taxes. The credit crisis and housing slump are affecting taxes levied on real estate deals. Sales taxes are shrinking as shoppers worried about the economy stay home. Every state in the union but Vermont legally requires a balanced budget, so state governments have begun cutting. The pain likely will spread beyond the state bureaucracies, as laid-off state workers and curtailed government spending help fuel a vicious economic cycle. The Center on Budget and Policy Priorities, which typically takes a liberal view on policy issues, notes that as the economy declines, residents require more services from their state government, not fewer. Some of the worst problems are emerging in states like California and Florida, where the housing collapse was the most pronounce, merchantcashadvance, News video

LiveVideo | October 24, 2008Watch more videos from LiveVideo

Tags:. .slowing. .almost. .writing. .rising. .already

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