Vol. 72/No. 27      July 7, 2008

Sales tax collections are lower than anticipated in 16 states as well as personal income tax collections in 12 states and corporate income tax in 16. Fuel costs have also skyrocketed.

One state, Alaska, lost $3 million when its nearly 44,000 shares of Bear Stearns tumbled from $88.25 a share to under $5. Tax income from sales and gambling fell steeply in Nevada.

According to the National Conference of State Legislatures, 23 states anticipate gaps totaling at least $26 billion for their 2009 budgets.

California is in one of the worst positions. Claiming a $16 billion deficit, Gov. Arnold Schwarzenegger has proposed $4.8 billion cut in education funding. About 20,000 teachers, counselors, librarians, nurses, and other school employees received written notice of potential layoff.

Eighteen states have about six months worth or less in reserves used to pay unemployment benefits, half the recommended one-year cushion. Michigan, Missouri, New York, and Ohio have just a few months reserve.

Many layoffs are still in the proposed stage, including 3,000 state employees in New Jersey, 1,200 in Rhode Island, and thousands in Arizona.

Huge cuts in health care have been proposed in Maine, California, and Arizona. In Illinois’s Cook County, women in poor neighborhoods no longer have access to free mammograms from mobile vans.

On June 19 the Miami-Dade School Board voted to eliminate hundreds of positions, bringing the total number of job cuts to 2,000, including 950 teaching jobs, after the state of Florida severely cut school funding.

Stateline.org, an internet news service that focuses on state governments, reports that many have already slashed programs and others are trying “creative approaches to gin up more revenue.” One sure bet: cutting debt service payments to wealthy bondholders will not even be considered.

New Jersey governor Jon Corzine exemplifies the “creative” approach. He under-funded employee pension contributions there by 50 percent. Corzine proposed $1 billion in cuts for the 2009 budget. At the same time he hopes to pay half of the state’s $32 billion in bonded debt.

Figures on how much states pay in debt service are hard to come by. But statistics on New York give a little bit of a feel for the immense amount of money filling the coffers of the rich.

New York, which has a budget of more than $80 billion for 2008-09, has $50 billion in debt outstanding and will pay out about $3.5 billion to bondholders.

While cuts in social services are being planned and implemented, many states have been increasing a variety of taxes that affect working people the most.

Since the 2002 recession, 43 states, the District of Columbia, and several U.S. “territories” raised cigarette taxes 75 times. New York State recently raised the cigarette tax to $2.75 a pack, the highest in the country. Maine doubled excise taxes on beer, wine, and soda.  
 
 
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