34 states saw tax collections decline in the first quarter of 2010. State budget deficits projected well into 2010
Plunging tax revenues reflect a weaker economy dragged down by pervasive unemployment and underemployment. $112 billion in state budget gaps for fiscal 2011.
Big states with dismal budget short falls like California and New York have been making the news for the last couple of years. Yet the problems with state budget deficits go beyond the big and mighty. The banking system has been stabilized at a very high cost to average Americans but state budget deficits reflect a deeper underlying problem. States generate revenue through a variety of taxes; these show up through payroll taxes, sales taxes, property taxes, and other fees. As a metric for the economy, these are a good way of measuring the health of economic activity. Looking at current massive budget deficits states are mired in expenses with revenues falling. For the next fiscal year of 2011 states will face a combined $112 billion in budget short falls. California’s current budget deficit is $19 billion (current plus next fiscal year). But things can and may get worse.
A recent survey compares this recession with the previous recession: