Fresh Budget Cuts Ordered from Oregon to Alabama

Virginia made headlines in July when its new governor, Republican Bob McDonnell, announced that the state would have an unexpected budget surplus after a difficult legislative session focused mainly on cuts. For the first time in four years, McDonnell said, Virginia employees would receive raises.

Elsewhere, however, the budget bleeding continues — a fact underscored by the grim newspaper headlines that have emerged from a handful of state capitals in the last week alone.

In perpetually beleaguered California, the standoff over the state budget is now the longest in history, The San Francisco Chronicle reported . The state faces a $19 billion budget deficit — a gap larger than some states’ entire budgets — and Democrats and Republicans have shown few signs of agreement. Term-limited Governor Arnold Schwarzenegger, a Republican, even suggested at one point that he might leave office before the sides reached a deal.

California’s Pacific Northwest neighbors also have faced notably rough budget decisions recently.

In Oregon, state agencies submitted their plans Thursday (Sept. 16) to help Democratic Governor Ted Kulongoski close a $377.5 million budget shortfall — just the latest deficit to hit a state where revenues have consistently fallen short of expectations during this downturn. The Statesman-Journal of Salem reported that the cuts “amount to 8 percent of the remaining nine months of the two-year budget cycle and … are on top of 9 percent cuts earlier this year to eliminate a projected $577.1 million shortfall.” Making Oregon’s outlook even more alarming is the fact that voters there raised taxes by $727 million earlier this year.

In Washington State, Democratic Governor Christine Gregoire said Thursday that she is cutting 6.3 percent, or about $520 million, from the current two-year budget, with the brunt of the reduction aimed at the state’s Department of Social and Health Services, The Seattle Times reported .

In South Dakota, Governor Mike Rounds is asking all state agencies to prepare budgets for next year that are 10 percent below this year’s levels, The Capital Journal of Pierre reported . The state finance commissioner told the paper that the governor’s cuts aren’t binding and are only a request at this point, but they reflect that Rounds, a term-limited Republican, is expecting more budget troubles going forward.

In Tennessee, another outgoing governor, Democrat Phil Bredesen, is asking state agencies to trim their budgets by 1 to 3 percent ahead of next year, The Tennessean reported . That means overall state spending could decline by $45 million to $160 million.

Meanwhile, in Alabama, a new budget headache is being caused not by recession-related revenue declines, but by BP’s refusal to pay the state’s $148 million claim stemming from the April oil spill in the Gulf of Mexico, The Montgomery Advertiser reported . Officials had submitted the claim to the oil giant in the hopes of being reimbursed for sales tax and other losses directly related to the spill, but the company is refusing in part because Troy King, Alabama’s attorney general, is suing the firm to recoup damages. BP says King’s lawsuit complicates the claims process.