State Budgets Caught in Economy's Freefall

Spending cuts, tax increases in store
By Kevin Spak,  Newser Staff
Posted Mar 17, 2008 12:38 PM CDT
California's Capital Building is seen in this undated file photo. California is facing a $14.5 billion budget shortfall.   (Shutterstock)
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(Newser) – Politicians from New York to California are wringing their hands, wondering whether to cut spending or raise taxes. As the economy barrels towards recession, income and sales taxes are coming in well below expectations, and about half the states in the country are facing budget shortfalls, the New York Times reports. In many places, health care and education are on the chopping block.

In California, for example, Gov. Schwarzenegger is proposing a hitherto unheard of $4.4 billion cut in education spending, to chip into an expected $14.5 billion shortfall. And while tax hikes are usually a last resort, several states have increased sales and cigarette levies. One state budget maven likened it to household finance. “When gas and milk costs go up, there are only so many ways to solve it.”