States Draw Up Plans for Year of Even Bigger Budget Cuts

Publication: The Wall Street Journal

Author: Amy Merrick

11/12/2009 - After months of spending cuts and layoffs, states are drawing up plans for tax increases and an even larger round of service reductions next year as budget shortfalls continue to widen.

In hard-hit Michigan, Democratic Gov. Jennifer Granholm directed state agencies last week to plan for 20% budget cuts for the fiscal year beginning Oct. 1, 2010, on top of 10% cuts made to balance the current budget.

Indiana Republican Gov. Mitch Daniels said last week that revenue for the first four months of the fiscal year was 7.4%, or $309 million, below forecasts. He ordered state agencies to cut spending by 10%, on top of 5% cuts at the beginning of the current fiscal year.

report Wednesday from the nonpartisan Pew Center on the States warned of "fiscal peril" in clusters of Midwestern and Western states, the result of widespread foreclosures, rising unemployment and poor financial management. The report cited Illinois, Michigan, Wisconsin, California, Oregon, Nevada and Arizona. Florida, New Jersey and Rhode Island also were in bad shape financially, the Pew report said.

Read the full article States Draw Up Plans for Year of Even Bigger Budget Cuts on the Wall Street Journal's Web site.

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