Report finds state budgets hammered by national recession

Report: Recession hurts state budgets

NEW YORK — The national economic recession has hammered state budgets nationwide, with at least 43 states projecting deficits totaling more than $121 billion next year, a new report found.

The survey released Tuesday by the National Conference of State Legislatures also found two-thirds of states expect budget deficits in 2011, forcing lawmakers to find further savings on top of deep cuts they’ve already made to education, health care, corrections and other programs.

Corina Eckl, director of the NCSL’s fiscal program, called the states’ budget situation “jaw dropping” and said little relief was in sight, as the weak economy has led to precipitous drops in state tax revenue.

“We’re seeing reductions in higher education funding, with universities looking at cutting programs and raising tuition,” Eckl said. “K-12 education, which is usually preserved, is getting hit, with programs being eliminated outright. That’s the magnitude of the problem.”

Unlike the federal government, nearly every state is legally required to balance its budget.

The report found that 19 states and Puerto Rico face shortfalls equal to or greater than 10 percent of their budgets, with Alaska, Arizona and Puerto Rico above 20 percent. Only Iowa and Nebraska had gaps below one percent of their budgets.

California, the nation’s most populous state, has struggled to close the biggest shortfall of all — about $42 billion over budget years 2009 and 2010. Gov. Arnold Schwarzenegger signed an agreement in February to close the gap, but voters must ratify several of its provisions in a special election next month before it can take effect.

Eckl said the funding directed to states through the $787 federal stimulus plan President Obama signed in February was “the one bright spot” that would ease some budget pressures.

“Without the stimulus money, things would be a lot worse,” Eckl said.

On the Net:

National Conference of State Legislatures: http:www.ncsl.org