July 1 was New Years Day for 46 states. And like hungover New Years revelers, many state lawmakers aren’t feeling so well.
Their discomfort is caused by headache-inducing budget deficits and the need for deep spending cuts or tax increases to fill the gaps. All this is being driven home by the dawn of a new fiscal year.
“Not much to look forward to,” said Arturo Perez, fiscal analyst for the National Conference of State Legislatures, when asked about state finances in the year ahead. And that’s after a year-gone-by in which states saw their worst budget deficits in a decade.
“About the only good thing you can say about fiscal year 2002 is that it’s over,” said Perez.
Nowhere is the situation worse than in Tennessee. Despite working through the weekend, Tennessee lawmakers couldn’t pass a budget before their July 1 deadline, leading to a partial shutdown of state government.
Late Sunday night, Gov. Don Sundquist signed a temporary, emergency budget that will keep prison guards and other essential personnel in their positions.
“I can’t believe that after exhaustive debate over the four regular and two special sessions that the General Assembly still hasn’t made a decision,” said Sundquist in announcing the emergency budget. “The result is a partial shutdown of government, which ignores both the short-term and long-term needs of our state.”
About 22,000 state workers were told to stay home Monday, including drivers license renewal personnel and nearly the entire Department of Economic and Community Development.
Furloughed workers will not be paid unless they use vacation time, but not sick time, to cover their days out of the office.
Though in less dire straits than Tennessee, many other states find themselves in similar positions.
California entered the new fiscal year with no spending plan in place as lawmakers attempt to close a .4 billion deficit. This is nothing new for California, where lawmakers have failed to meet the July 1 budget deadline more often than not since the mid-1970’s.
On Sunday, Assembly Republicans blocked a billion budget, citing the proposed .6 billion in tax increases, the San Francisco Chronicle reported.
Nonetheless, California will continue to pay employees and fund programs. A string of court decisions in the early 1990’s mandates continuing operations regardless of the budget situation.
Connecticut lawmakers passed a .2 billion budget late Sunday night, just hours before the new fiscal year began. The budget mandates the state’s first tax increase since 1991, including a 61-cent per pack cigarette tax hike, to help close a budget gap estimated at billion over two years.
New Jersey missed its budget deadline, but only by a hair. Shortly after midnight, lawmakers put the finishing touches on a .4 billion budget.
The plan does not include a billion business tax overhaul that Gov. James E. McGreevey said was necessary to keep the budget balanced.
At a 2:30 a.m. press conference, McGreevey said he would sign the budget plan, but only after freezing billion in spending. He wants lawmakers to come back before the July 4 holiday to work out the business tax issues, the Newark Star-Ledger reported.
Oregon lawmakers closed a 20-hour session Sunday by passing a plan to close the state’s million budget deficit. It includes two provisions to be weighed by voters on Sept. 17 a 60-cent per pack cigarette tax increase and a million fund transfer for schools.
Pennsylvania Gov. Mark Schweiker signed a .7 billion budget bill early Saturday morning that closes a deficit projected at .3 billion.
Just months after promising no new taxes, Schweiker signed a budget that triples the cigarette tax, takes million from the rainy day fund and raises landfill dumping fees.
In Washington, at least 419 state workers woke up Monday morning without a job, the Seattle Times reported. The workers, who represent less than 1 percent of the state’s 63,516 employees, are the victims of a budget-balancing plan passed earlier in the year.
Given a recent up-tick in the national economic outlook, state lawmakers are hopeful the days of bad budgets are behind them. But state fiscal analysts say it may be some time before state coffers are warmed by a heated economy.
“They can look forward to some signs of improvement,” said NCSL’s Perez. “But given the latest data, there’s not much encouragement.”
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