State legislators will grapple with budgets in ’09

Published 12:59 am Thursday, January 1, 2009

Worsening budget shortfalls will prompt many state lawmakers to ask a basic question when they return to work in January: 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.

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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 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.

In Mississippi, Republican Gov. Haley Barbour was forced to trim about 2 percent from the $5 billion state budget in November because of lagging tax collections. He expects to make more cuts before the fiscal year ends June 30. For next year, Barbour proposes more spending reductions, combined with an increase in the tobacco tax and a dip into the state’s financial reserves.

“I made a proposal that I think is very common to what families do,” Barbour said. “If your husband gets his hours reduced, if they’re cutting back at the plant and he goes from getting some overtime to working 32 hours a week, what do you do? Well, somebody has to find a part-time job to get your revenue up…. I have in my budget a revenue increase by raising the cigarette tax.”

Those dependent on services facing cutbacks are expressing feelings ranging from vulnerability to anger:

— Activists in South Carolina, where steep health care 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.

— Washington Gov. 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 Gov. 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.

“The student fee will definitely come out of my pocket,” she said.

— In Ohio, 54-year-old Lisa Wayne of Fredericktown said budget cuts forced her in June to retire early. Wayne, who worked as an activity therapist for 31 years at a state agency that helps people with mental disabilities, said keeping her job would have meant cuts in pay, hours and days off.

After watching the value of her retirement savings deteriorate as stock markets cratered, Wayne, who lives with her brother and boyfriend, is now trying to find another job. “If I had lived by myself, I probably would have had to sell my house,” she said.

The roots of states’ budget woes include: plunging real estate values and home sales; a near collapse of the auto industry; a devastated stock market; and rising unemployment.

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.

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.

The challenge facing governors will be made easier by a federal stimulus package that President-elect Barack Obama has said would deliver hundreds of billions of dollars in transportation and infrastructure funds. However, that will not eliminate the likelihood of significant cutbacks in a wide range of services.

“Ultimately, it gets us back to what is government here for,” said Georgia state Sen. Mitch Seabaugh, a conservative Republican who sits on the Appropriations Committee.

In Georgia, Gov. Sonny Perdue has said he’ll borrow more money for road projects and school construction, while state legislators are considering a tax on the adult entertainment industry, dubbed “the pole tax.”

In California, where the deficit is expected to balloon to $42 billion in 18 months, Democrats and Gov. Arnold Schwarzenegger have proposed a combination of new taxes and massive spending cuts, although they have yet to reach a compromise. Both plans would cut deeply into K-12 education, college funding and payments to the elderly and disabled.

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 Gov. David Paterson has proposed. Paterson also has proposed slashing aid to schools and cutting the state work force by more than 3,000 jobs.