States Closed Record $142.6 Billion in Gaps

States closed $142.6 billion in budget gaps for fiscal 2010 and could face more shortfalls in the next two budget years, according to a report released Monday (July 20).

The National Conference of State Legislatures issued the report on state budgets and taxes as it opened its annual legislative summit in Philadelphia.

The recession forced state lawmakers to close an even larger difference between revenues and spending as they wrote their budgets for fiscal 2010, which began July 1 in most states, than they faced in fiscal 2009, when the gap totaled $113.2 billion, the report said. Several states have reported new gaps in fiscal 2009 and 2010 because of continuing monthly declines in revenue over a year ago, but the report did not give a breakdown.

Nearly two-thirds of the states already are projecting budget gaps in fiscal 2011, the report said, and some state officials say the pattern will be repeated in fiscal 2012.

"Because the current state fiscal crisis began in fiscal 2008, many states are looking at a minimum of four to five consecutive years of deep fiscal problems, and maybe more," the report said.

About $100 billion of the federal economic stimulus package helped states cover budget gaps in 2010; next year states will have about half that amount of stimulus money. The report raised questions about how states will make up the gap between revenues and spending after the stimulus dollars dry up.

Connecticut, North Carolina and Pennsylvania still do not have budgets for the fiscal year that began July 1. After missing the budget deadline, Arizona lawmakers have approved a plan but are working out the final details in a special session. California reported a breakthrough late Monday in trying to end its impasse over how to erase a $26.3 billion deficit that opened in the budget it passed in February.