TALLAHASSEE, Fla. - In Arizona, college students from across the state rallied this month at the state Capitol to protest cuts in university funding.
In California, the governor has called a special legislative session and recommended slashing school spending after the biggest drop in state income in half a century.
In Ohio, the governor has urged an increase in business taxes. The House speaker, the Senate president and the governor - all Republicans - are feuding after a failed attempt to plug a $1.5 billion budget hole.
As Florida legislators return to Tallahassee on Tuesday to again try to dig their way out of a $1.3 billion deficit, many state lawmakers across the country seem to be working from the same script.
For the first time in a decade, state governments are freezing salaries, raiding rainy-day funds and chopping spending for schools, highways and health care.
After years of slashing taxes, some states are raising taxes, rolling back tax cuts - or both - to bolster slumping state income. North Carolina has raised income taxes and sales taxes, and other states have proposed tax increases, including Arizona, Alabama, Ohio, Wyoming, Washington, Indiana and Tennessee.
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"States are in the worst shape they've been in 10 years," said Kevin Carey, a policy analyst at the Washington-based Center on Budget and Policy Priorities. "There's only so much smoke and mirrors in your closet you can pull out, and then you either need to raise taxes or cut spending."
At least seven states have called special legislative sessions to deal with budget problems brought on by a weak national economy, the Sept. 11 terrorist attacks and other problems.
Nineteen states are over budget, according to the National Conference of State Legislatures, and 20 states may have to raid reserve funds just to meet their existing budget. More than 30 states have cut their budgets or are looking for cuts, Carey said. And things are expected to get worse before they get better.
The pain is already spreading.
Massachusetts has eliminated 300 school-nurse positions. Connecticut cut spending on early-childhood education.
In Indiana, Democratic Gov. Frank O'Bannon went on television to call for increased taxes to overcome a fiscal crisis that "threatens our very way of life."
North Carolina has raised taxes by $620 million, boosting the income-tax rate for the state's wealthiest taxpayers, increasing the sales tax on alcohol and bumping the sales tax half a cent to 4.5 cents.
"Without that, we would have had major cuts in education and mental health," said N.C. State Rep. Paul Luebke, a Democrat on the House finance committee who crafted the tax package. "We didn't have any money left."
Among states in the worst shape are California, Arizona, Indiana, North Carolina and Tennessee. Only about six states have avoided significant budget deficits, including Texas and Louisiana, which benefit from energy taxes.
"Florida is somewhere in the middle," Carey said. Florida's $48 billion budget is the nation's fourth largest.
California, with a $103 billion budget, has been hammered by energy problems and a drop in tourism. It's facing a budget deficit of up to $12 billion - almost 10 times as big as Florida's. California Gov. Gray Davis has asked state agencies to cut budgets by 15 percent. California has benefited from income tax and investment taxes from high-flying high-tech firms such as Intel and Cisco Systems.
"Now, most of those firms are below water, and the state won't be collecting anything near that amount," said Arturo Perez, a senior budget analyst at the National Conference of State Legislatures.
More than half the states have seen their incomes fall in the past year, according to the Rockefeller Institute. Reasons vary from state to state, but many cite the slumping national economy and a sharp drop in tax income from stock-market investors. Others blame a wave of politically popular tax cuts during the boom years of the 1990s that drained reserve funds and left states ill-prepared for an economic blow.
In North Carolina, tax cuts and natural disasters added to the woes. Cleanup costs from Hurricane Floyd in 1999 wiped out the state's rainy-day fund. The state also eliminated several sources of tax money, including an intangibles tax on stocks and bonds -- the same tax that has been a sticking point in Florida's budget talks.
"We had already cut spending and cut taxes significantly in the '90s," Luebke said. "A lot of us feel the cuts were too big and we were cruising for a bruising."
Knight Ridder Tribune
