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Budget Gaps Trouble US State Governments

Across the United States state governments are facing difficult choices in balancing their budgets. Decreased revenues and increased costs combined with diminished federal funds have created a problem for state officials.

Here in the state of Illinois, a battle over the budget is putting a focus on the hard choices that face local officials all across the nation. Illinois Governor Rod Blagojevich presented a budget proposal this week to the legislature in the state capital of Springfield that would provide balance without sacrificing important social programs.

"The measures in my budget will allow us to close the $1.7 billion budget deficit without raising the income tax, without raising the sales tax and while doing more for education, health care and public safety," he said.

The governor proposed tax increases of $395 million in the form of fees and taxes on businesses. Some business leaders have called the tax hikes misguided. Douglas Whitley, president of the Illinois Chamber of Commerce, says the tax increases on businesses could be counterproductive, by discouraging growth and holding back job creation.

What is happening here in Illinois is mirrored in other state budget battles all across the country. A report issued this week by the National Conference of State Legislatures, or NCSL, shows that state budget gaps have grown by 50 percent in just the last two months.

One problem cited by the organization is diminished funds from the federal government. State budget planners say they are concerned that the proposed federal budget for next year does not provide money to the states for such mandates as the "No Child Left Behind Act", special education and election reform. The NCSL report also blames much of the deficit on the slowdown in the national economy, stock market declines and soaring health costs.

Thirty three states face budget gaps of at least five percent, according to Angela Monson, an Oklahoma state legislator and president of the NCSL. The bipartisan organization's survey shows that two thirds of the states must reduce their budgets by a total of more than $26 billion between now and June 30, which is the end of the fiscal year for most states. State legislatures face an overall deficit of more than $68 billion for the next fiscal year.