U.S. State Deficits Top $100 Bln, Legislators Say

Jan. 27, 2003
By Eddie Baeb

Washington, (Bloomberg) -- U.S. states from California to Connecticut have raised budget deficit estimates to $105.7 billion, or $367 for every person in the country, a legislators' group said.

State tax revenue has plummeted because of the nation's stalled recovery and stock market losses, causing governors in Arizona, Colorado and Connecticut to fire state workers to save money. California and Oregon are among states considering income tax increases.

State municipal bonds may drop in price because of the deficits, said Philip Condon, who helps oversee $9 billion of Scudder municipal bond funds for Deutsche Asset Management in Boston. "The bulk of the pressure will be felt by people who rely on government services, the municipalities, and taxpayers, who will probably see some increase in taxes.''

The deficit total is up 17 percent from $90 billion calculated as recently as last month by the American Legislative Exchange Council, a lobbying group. The figure includes 21 states that budget every two years and use estimates through fiscal 2005. Through fiscal 2004, the states are facing $92 billion in deficits, the group said.

Michael Flynn, director of legislation and policy for the legislative group, said many states planned for a boost in revenue this fiscal year from an economic recovery that has yet to materialize.

No Pick Up

"States expected the economy to pick up and be almost fully back to boom times again,'' Flynn said. "Now that we know that's not happening, their problems are worsening. Budget problems are going to drive just about every legislative session this year. Everything's going to be about the budget.''

California has the largest deficit, now estimated at $34.8 billion over the next two fiscal years, up from an earlier projection of $21 billion. The deficit is about $1,000 for every state resident over the next two fiscal years, according to the estimate by Governor Gray Davis. Legislative Analyst Elizabeth Hill said the state deficit is almost $9 billion less, or $26 billion.

New York, with an estimated deficit of $12.5 billion, has surpassed Texas' $9.9 billion shortfall for the second-largest budget gap among U.S. states.

According to the American Legislative Exchange Council, budget deficits state by state are:

State Deficit in Millions

California 34800
New York 12500
Texas 9900*
New Jersey 5322
Minnesota 4616*
Ohio 4000*
Massachusetts 3050
Connecticut 2650*
Wisconsin 2600*
Illinois 2250
Michigan 2100
Washington 2000*
Maryland 1848
Oregon 1800*
Alaska 1500
Virginia 1500*
Arizona 1280*
Oklahoma 1091
Kansas 1000
Maine 1000*
Missouri 1000
Indiana 850*
Tennessee 822
Nebraska 673*
Alabama 580
Colorado 550
Kentucky 509*
North Carolina 500*
Pennsylvania 433
Iowa 400
Nevada 350*
South Carolina 331
Montana 272*
New Hampshire 250*
West Virginia 250
Georgia 227
Hawaii 187*
Idaho 160
Rhode Island 140
Utah 117
Mississippi 100
Louisiana 86
Vermont 40
South Dakota 35
Florida 0
Delaware 0
Arkansas 0*
New Mexico 0
North Dakota 0*
Wyoming 0*

* Includes estimates through fiscal 2005.

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