WASHINGTON – Strapped for money because of a sluggish economy and rising costs for services, state lawmakers implored Washington Tuesday to strengthen its commitment to homeland security, education and election reform.
The National Conference of State Legislatures released a report saying budget gaps for state governments soared by nearly 50 percent in the past three months -- to $25.7 billion.
The federal government needs to provide billions to live up to its commitment, argued Oklahoma state Sen. Angela Monson, NCSL president.
"We don't think the budget proposed by the president ... goes far enough," she said. "Flexibility alone will not meet these needs."
The report conlcuded there is "no immediate end in sight" to severe budget troubles and warned that next year promises to be even more difficult.
Among the dismal findings in the report, compiled from data collected during the first six months of the fiscal year that began July 1:
--The collective budget shortfall for state governments jumped nearly 50 percent between November and January, rising from $17.5 billion to $25.7 billion, despite scaled-back spending plans.
--Next year's projected shortfall is $68.5 billion, a nearly 40 percent jump from this year's estimate of $49 billion.
--Thirty-six states reported current gaps between income and spending; 19 states were missing money equal to 5 percent or more of their total budgets.
"The numbers are staggering," said Corina Eckl, head of the bipartisan conference's fiscal program. With estimates for 2004 incomplete for 11 states, the gaps probably will be even larger when final numbers are in, she said.
The report came a day after President Bush gave Congress his $2.3 trillion spending plan for the 2004 fiscal year starting Oct. 1. Bush proposed to give states more latitude in spending federal money for Medicaid, which provides health coverage for the poor, and for Head Start preschools in low-income neighborhoods.
His budget projects federal grants to state and local governments to rise nearly 4 percent next year to $398.8 billion, about 18 percent of the federal budget. More than $18 billion of the increase, however, is in mandated benefit programs such as Medicaid. For discretionary grant programs, Bush is asking Congress to cut what it appropriates for state and local governments to $154.1 billion, compared with $157.8 billion this year.
States already have taken sweeping actions to deal with their plight, laying off workers, releasing prisoners early, and tapping rainy day funds.
For all but four states, the 2003 fiscal year began in July. Twenty-nine states so far imposed across-the-board budget cuts, with eight states laying off workers. Others cut programs in elementary and higher education, Medicaid and corrections.
Projections for tax revenues, the fuel that runs state programs and services, were too high in at least 30 states, even though all scaled them back as the economy worsened.
Next year promises to be worse, the report found. Again, 36 states reported they expect a shortfall next year, and half of them said it would equal at least 10 percent of their budget.
The problems stretched nationwide. In California, a conservative estimate of next year's gap equaled 30 percent of the budget; in New Jersey, the budget shortfall equaled 18.5 percent. Minnesota's is 15 percent.
"It's a struggle just to provide essential state services ... just what's absolutely critical," said Kansas state Sen. Steve Morris.
His state faces an estimated $750 million shortfall next year, NCSL said.
Eckl said the shortfalls since the economy began weakening in 2001 add up to $180 billion, with the total likely to break $200 billion by the year's end.
In contrast, states cut $35 billion in taxes over the course of seven boom years during the 1990s; last year, states raised taxes overall by $9.1 billion.
The question now is what can states do to get through the tough times.
The report found that tax increase proposals are being considered in 24 states; at least 14 will consider higher cigarette taxes, while six are weighing higher taxes on alcohol. Six states are looking at sales taxes, four at income taxes.
"There are lawmakers across this nation who promised as part of their platforms that they wouldn't raise taxes," Eckl said. "Now they'll have to see if they can abide by those promises."