December 19, 2007 (LPAC)--Fueled by a crashing housing market, more and more U.S. states find their revenue coffers are shrinking. At the end of October, the close of the first quarter of most states' fiscal year which began July 1, states had begun to report collapsing revenues.

California then estimated a $10 billion shortfall in revenues while Florida, Maryland and Virginia estimated nearly $1 billion-plus revenue gap. Executive Intelligence Review reported in mid-November these shortfalls were only the tip-of-the-iceberg, and that, by January, governors and legislators would be faced with bigger budget holes. Indeed, California's newest shortfall estimate is $14 billion, Florida's has doubled to $2 billion while Arizona and New Jersey joined the $1 billion-plus shortfall group.

Three reports released since Dec. 1 each found that states' deficits are growing rapidly and that the housing market crisis is a major cause of evaporating tax collections. The latest report issued on Dec. 18 by the Center on Budget and Policy Priorities found nearly half the states are predicting budget shortfalls over the next 2 fiscal years, with 13 indicating a deficit will likely occur when the new fiscal year begins July 1, 2008. CBPP estimates deficits, cumulatively, could hit at least $23 billion. "We're really teetering on the edge," said Iris Lav, the center's deputy director. "With the deficits this large already before there's actual evidence we're in a recession [sic], that seems quite serious."