Stimulus could cost states billions in taxes

? President Barack Obama told the nation’s governors in February that the states’ $229 billion share of the stimulus package “will ensure that you don’t need to make cuts to essential services that Americans rely on now more than ever.”

But while one hand of the federal government is offering Medicaid, education and other direct assistance to the states, the other hand could reduce state tax revenues by billions of dollars. That’s because many states copy adjustments in the federal tax code into their own to make things less confusing for taxpayers — and the $787 billion stimulus package is heavily laden with federal tax breaks and incentives.

The changes could dwindle revenues at a time when states are facing their own fiscal crises.

The total potential losses are hard to calculate nationwide because states are still figuring out how to spend their money.