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States plunging into red

©Associated Press
February 5, 2003

WASHINGTON -- The flood of red ink for state governments just keeps rising: Expected budget shortfalls jumped by close to 50 percent in the past three months, and the situation is expected to worsen, the National Conference of State Legislatures said Tuesday.

The deteriorating situation could prompt more cuts in a wide range of programs such as elementary schools, health care for the poor and more. Additionally, it will increase pressure on state lawmakers to raise taxes.

Oklahoma state Sen. Angela Monson, who presented the findings of a conference study at a news conference, said if the federal government doesn't help, many states will have no choice but to raise taxes and fees.

Several states are already discussing raising so-called sin taxes, on cigarettes or alcohol, while others are pushing gambling to raise revenue.

Monson and others from the bipartisan legislators' organization criticized the $2.3-trillion federal budget that President Bush proposed Monday. The plan, they said, fails to provide billions needed for education, homeland security and election reform, or to provide enough help to offset soaring costs of Medicaid, the federal-state health care program for the poor.

The report's findings were compiled from data collected during the first six months of the fiscal year, which began July 1 for all but four states. Among findings:

The collective budget shortfall for state governments jumped nearly 50 percent between November and January, rising from $17.5-billion to $25.7-billion, despite scaled-back spending plans.

Next year's projected shortfall is $68.5-billion now, but analysts said that probably will get higher as revenues continue sagging. That's a jump of almost 40 percent from this year's estimate of $49-billion. Last year's shortfall hit $37-billion.

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