Report: State budget gaps jump nearly 50 percent

? The flood of red ink for state governments just keeps rising: Expected budget shortfalls jumped by close to 50 percent in the past three months, and the situation is expected to worsen, the National Conference of State Legislatures said Tuesday.

The deteriorating situation could prompt more cuts in a wide range of programs such as elementary schools, health care for the poor and more. Additionally, it will increase pressure on state lawmakers to raise taxes.

“It’s dismal and probably getting worse,” said Nebraska state Sen. Roger Wehrbein, who heads his state’s budget-writing Appropriations Committee. “Even if the economy turns around, we don’t go to war and oil prices don’t go up, it’ll still be two or three years before we see improvements in state revenue.”

Several states are already discussing raising so-called sin taxes, on cigarettes or alcohol, while others are pushing gambling to raise revenue, like Maryland Gov. Robert Ehrlich’s proposal to put thousands of slot machines at the state’s racetracks.

Oklahoma state Sen. Angela Monson and others from the bipartisan legislators’ organization criticized the $2.3 trillion federal budget that President Bush proposed Monday. The plan, they said, fails to provide billions needed for education, homeland security and election reform, or to provide enough help to offset soaring costs of Medicaid, the federal-state health care program for the poor.

The report’s findings were compiled from data collected during the first six months of the fiscal year, which began July 1 for all but four states.

The faltering economy, along with weakness in the stock market, manufacturing and the high-tech industry, drove down tax revenues. Add soaring health care to the mix, and “there is no immediate end to these severe budget troubles,” the report said.

In his 2004 budget plan, Bush heeded governors’ request for flexibility on federal rules. He proposed to give states more latitude in spending federal money for Medicaid and for Head Start preschools in low-income neighborhoods.

An analysis of Bush’s proposal by the Center on Budget and Policy Priorities, a group that focuses on how policies affect poor people, concludes it would reduce tax revenues for the states by $64 billion over 10 years.