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States in a State of Red

Congress is about to ratchet up spending and cut taxes to stimulate the economy, with relatively little attention to balancing the budget. The federal government has the luxury to do that. Not so, for most states.

Their constitutions or laws demand strict budgetary balance, causing dozens of governors to scramble to meet that requirement as tax revenues shrink during the economic slowdown. And all levels of government are having to stretch budgets to respond to security demands in the counterterrorism effort.

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It's a time that calls for closer state-federal teamwork to meet the economic and security crises.

Just how bad off are the states? Latest budget forecasts show many of them facing billion-dollar-plus deficits - for example: California, $9.5 billion; New York, $9 billion; Ohio, $1.5 billion; and Florida, $1.3 billion.

Those numbers portend large spending cutbacks unless local taxpayers and lawmaker decide to take on more taxes in the fight against terrorism. Congress can help, but it can't bail out the states. Both the bad economy and Sept. 11 have opened up a need to rebalance federal-state responsibilities.


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