States' bleak fiscal outlook grows dimmer

The overall economic situation of states in fiscal 2002 continues to deteriorate, forcing state officials to tap into reserve funds and implement strict cost-cutting measures, according to a report released by the National Conference of State Legislatures Feb. 7.

Among the highlights of the report:

*Forty-five states and the District of Columbia report revenue has failed to meet budgeted levels;

*Twenty-eight states and the district report spending is above budgeted levels;

*Thirty states have implemented budget cuts or holdbacks to address financial problems in fiscal 2002;

*Fifteen states and the district have tapped into reserve funds to help balance their fiscal 2002 budgets;

*Thirty states have implemented belt-tightening measures, and a least seven states have delayed, reduced or canceled capital projects;

*Thirty-seven states and the district face potential budget gaps in fiscal 2003;

*Tax proposals to help balance fiscal 2003 budgets are under consideration in 19 states.

A number of key state programs have exceeded their budgets in many states. These include Medicaid, temporary cash assistance, mental health, corrections, state employee health plans, education, security and prescription drug assistance for the elderly, the organization said.

A few states, however, are reporting revenue on or slightly above target. These states are Louisiana, North Dakota, Texas, West Virginia and Wyoming.

The report is based on information collected from legislative fiscal directors in January. While the report addresses budget problems in fiscal 2002, it also anticipates how fiscal developments will affect fiscal 2003 budgets.

The NCSL of Denver is a bipartisan organization dedicated to serving the lawmakers and staffs of the 50 states and U.S. commonwealths and territories.

About the Author

William Welsh is a freelance writer covering IT and defense technology.

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