Leaning the wrong way

News AASHTO Journal January 07, 2003
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State legislatures are trying to figure out ways to cut another $17

State legislatures are trying to figure out ways to cut another $17.5 billion after having to slash $49 billion this fiscal year to meet balanced budget mandates. The outlook for FY 2004 also looks grim, according to the National Conference of State Legislatures (NCSL).

The NCSL named budget shortfalls as the No. 1 state legislature issue for 2003, saying that while legislators will be making decisions on education, health care and homeland security issues, every issue "will be influenced by the budget."

In FY 2002, state tax collections were 3.2% lower than budgeted, personal income tax collections were down by 12.8% and corporate income taxes were 21.5% below projections. End of the year balances plunged by some 70% since FY 2000, declining to $37.8 billion, $17.1 billion and $14.5 billion in FY 2001, 2002 and 2003.

States have relied on a range of strategies to bridge the gap between revenue and spending, including across-the-board cuts, employee layoffs or early retirements, and some $8.3 billion in tax and fee increases. However, many of the budget-cutting tools states have relied upon in the past two years are one-time only, leaving fewer options for FY 2004.


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