States Get Creative When Balancing Budgets

State government leaders are coping with widespread budget shortfalls triggered by rising foreclosures and falling home values — both of which erode property tax revenue and reduce state revenue — in a variety of ways.

But balanced budgets — which are legally mandated in most, if not all, states — are never easy to accomplish; they usually consist of some combination of higher taxes and controversial cuts in social services.

Here’s a sampling of how state governments are currently grappling with vexing budget-balancing challenges:

Arizona: The governor is asking for a one-cent sales tax hike that would yield an estimated $1 billion a year.

California: Taxpayers have already been hit by increases in the state sales tax, income tax and vehicle license fee.

Hawaii: State workers’ health benefits have been reduced, and there’s been a temporary diversion of tobacco settlement monies to the state’s general fund.

Kentucky: The governor has replaced the free Kentucky Derby morning breakfast with a $1-per-item menu, saving the state $70,000 a year.

New Hampshire: Lawmakers are considering legislation that would legalize slot machines in the state.

Lawmakers have nearly doubled the state’s gas tax over the next three years, adding 15 cents to the current 19.6-cent tax.

New Jersey: State employees face a threatened layoff of between 5,000 and 7,000 workers if their union doesn’t agree to a wage freeze and furloughs.

New York: Prodded by critics that he was “aloof” from the problems of everyday New Yorkers, Governor Paterson cut his own $179,000 salary by 10%.

Elsewhere, a variety of proposals have died or look doubtful due to lack of support:

Florida: Expansion of Indian gambling casinos.

Georgia: Sunday liquor sales.

Idaho: A 6% car rental tax.

Indiana: Expansion of gambling.

Massachusetts: A proposed 19-cent hike in the state’s gas tax.

Virginia: The governor’s plan to allow prison officials to release a prisoner 90 days early at their discretion.

Tags: balance state budget, budgets, state budget cuts

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