State legislators will grapple with budgets in '09

Demands rise amid bleak economy

By Shannon McCaffrey and Julie Carr Smyth
Associated Press / January 1, 2009
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ATLANTA - Worsening budget shortfalls will prompt many state lawmakers to ask a basic question when they return to work this month: What must government provide its citizens?

In all but a handful of states, that list is already growing shorter, resulting in fewer health benefits for the poor, the closure of parks and recreation centers, and more inmates being crammed into ever-more crowded prisons.

Demand is simultaneously on the rise for Medicaid, food stamps, and unemployment benefits even as the delivery of these and other services is complicated by recent layoffs or furloughs for tens of thousands of state employees.

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.

In Massachusetts, Governor Deval Patrick Tuesday said he was preparing up to $1 billion in additional budget cuts, on top of cuts made two months ago when he announced a $1.4 billion budget shortfall that triggered cuts in almost every state department.

Six states - most of which benefited from oil and natural gas production - projected no budget gap for the current or next fiscal year, according to the center. However, falling energy prices could alter that equation.

Those dependent on services facing cutbacks are expressing feelings ranging from vulnerability to anger. Activists in South Carolina, where steep healthcare cuts already are being made, fear lawmakers will cut a $1 million HIV prevention program that pays for 39 church-based education initiatives.

"I know the state has to cut, and we're in a tough time, but . . . in 10 years, we're stuck with a problem that's unbelievable if they put that particular dilemma on the back burner," said the Rev. Thurmond Bowens Jr., whose 650-member Trinity Baptist in Columbia runs one of the programs.

In Washington, Governor Chris Gregoire wants to shrink a $5.7 billion budget gap projected for the next two fiscal years. Among the cuts Gregoire wants to make is $20 million in state funding for programs that provide part-time care to those with Alzheimer's and other chronic health conditions.

"I am astounded, just astounded that Governor Gregoire would eliminate it . . . these are the most vulnerable, the elderly, the ill," said 61-year-old Richard Lundgren, who used such a center outside Seattle twice a week for his wife who has Alzheimer's.

In Georgia, Taiye Oladipo, a senior at the University of Georgia, is scrambling to come up with an additional $100 spring semester fee tacked on by the Board of Regents to help with that state's budget shortfall.

Officials are unsure whether the fee will continue, but that's no help for students such as Oladipo.

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