January 21, 2008 (LPAC)--With 36 state legislatures now convened and Congress back in session, the cascading collapse of revenues has governors, mayors and legislators scrambling to do the impossible: balance budgets by slashing spending, and casting about for sell-offs and fixes. Minnesota declared itself in "recession" on Jan. 16. Today, Moody's Economy.com considers California, Michigan and Florida in "recession." The following instances from the Northeast, typify the national picture.
NEW YORK: State budget director Laura Anglin on Jan. 17 downgraded revenue projections by $1.2 billion, thus putting the next fiscal year's deficit at $4.4 billion, up from $4.3 billion just a month ago. A key factor she said is a 5.5% drop in Wall Street bankers and brokers' bonuses -- the State gets 20% of its revenues from Wall Street related taxes. NY State Comptroller Thomas DiNapoli wouldn't hazzard a guess as to how far those tax collections might fall but said the current gap was a "very conservative estimate of what its going to be." On Tuesday Jan. 22, Gov. Spitzer issues his budget and it is expected to contain up to $2 billion in spending cuts and revenue actions.
MASSACHUSETTS: Gov. Deval Patrick's budget out this week is to include a freeze on unemployment insurance rates, new corporate tax breaks, and likely cuts to programs -- Medicaid for one -- and make state employees pay higher medical insurance premiums as they scramble to plug a $1.3 billion revenue hole. State Rep. John Binienda, House chair of Joint Committee on Revenue, responded, "You're better off to build jobs, build economic development than to try, and chop it off to the knees."
NEW HAMPSHIRE: Gov. John Lynch, to close the state's $50 million revenue shortfall in the current fiscal year called for mid-year cuts. State Rep. Susan Almy, chair of the House Ways & Means committee, said the housing crash effects have caused the biggest revenue shortfalls: real estate transfer taxes, down $15 million and interest and dividend taxes down $10 million.
RHODE ISLAND: Gov. Don Carcieri released a "deficit-avoidance" plan Jan. 17 which cuts aid to cities and towns, eliminates subsidized health insurance for 7,400 low-income adults and 2,000 non-citizen children, and proposes forcing all state employees to take six unpaid workdays between now and June 30 -- which means they forgo 6% of their pay.
