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Read states' lips: No new taxes in next fiscal year, hardly

For most states, new taxes are off the agenda next fiscal year, according to reports from the National Governors Association. The recovering economy will yield higher tax revenues for states, but not to pre-recession levels.

President Barack Obama speaks on the state of the economy at Carnegie Mellon University in Pittsburgh, Wednesday. From the National Governors Association Thursday, new taxes are off the agenda next fiscal year for most states.

Jason Reed/Reuters

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State governments are poised to boost spending in their next fiscal year for the first time since 2008, and they generally plan to do it without raising taxes.

That news, from the National Governors Association Thursday, comes as states continue to face a financial squeeze.

Tax revenues have begun to recover but remain below where they stood when the financial crisis hit. The recession has boosted demand for social welfare programs such as Medicaid. And it won't be long before emergency aid from President Obama's Recovery Act begins to fade away.

"The fiscal situation for states going into 2011 will still be worse than before the recession," Scott Pattison, executive director of the National Association of State Budget Officers, said in a press conference.

Tax collections should rise as the economy recovers, he said. "We're projecting a 3.9 percent increase" in the 2011 fiscal year, which for most states begins in July. But that still leaves about 32 states facing budget gaps that collectively total $62 billion. Those will need to be closed largely with spending cuts.


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