More pain coming: State budget gap is $89 billion

By Hibah Yousuf, staff reporter


NEW YORK (CNNMoney.com) -- States will have to find a way to close an $89 billion budget gap before their 2011 fiscal year begins in July, according to a report from the National Conference of State Legislatures released Wednesday.

But there might be one sign of improvement on the horizon: In what the conference calls a "noteworthy turn," 42 states estimate that revenues will actually grow above current-year levels.

Texas is expected to post the largest increase, at 7%, followed by Hawaii (6%), Minnesota (5.6%) and Vermont (5.4%).

But since the growth will only be modest in most states, budget woes will linger.

And while revenues may be growing, spending demands are continue to rise. "Although the bulk of state fiscal problems can be traced to revenue declines, spending pressures are mounting," according to the report. "Far and away, Medicaid was the most common program exceeding budgeted levels, with 22 states reporting Medicaid overruns."

California faces the largest budget gap at $13.8 billion, the report said, with Illinois at $12.5 billion and New Jersey at $11.0 billion following close behind. The remaining states have balanced budgets for the year, and Alaska reported a $355 million surplus.

States are especially agonizing the wind down of federal stimulus funds, which will disappear by fiscal year 2012. State officials from 31 states and Puerto Rico forecast a $73.5 billion budget gap for that year, and 21 states project a $64.7 billion deficit for fiscal year 2013.

By the end of fiscal year 2013, the conference estimates states will have closed a combined $531 billion budget hole since the start of the recession. To top of page

Frontline troops push for solar energy
The U.S. Marines are testing renewable energy technologies like solar to reduce costs and casualties associated with fossil fuels. Play
25 Best Places to find rich singles
Looking for Mr. or Ms. Moneybags? Hunt down the perfect mate in these wealthy cities, which are brimming with unattached professionals. More
Fun festivals: Twins to mustard to pirates!
You'll see double in Twinsburg, Ohio, and Ketchup lovers should beware in Middleton, WI. Here's some of the best and strangest town festivals. Play
Index Last Change % Change
Dow 18,024.06 183.54 1.03%
Nasdaq 5,005.39 63.97 1.29%
S&P 500 2,108.29 22.78 1.09%
Treasuries 2.12 0.07 3.47%
Data as of 4:55am ET
Company Price Change % Change
Bank of America Corp... 16.11 0.18 1.13%
Apple Inc 128.95 3.80 3.04%
Alcoa Inc 14.15 0.73 5.44%
Microsoft Corp 48.66 0.02 0.03%
Chesapeake Energy Co... 16.54 0.77 4.88%
Data as of May 1
Sponsors

Sections

Aktarer Zaman was sued by United Airlines for his website Skiplagged.com, which helps people find cheap flight tickets. More

PredictifyMe uses data to predict the future. They tell Laurie Segall how many views, Facebook 'likes', and tweets this story will get. More

Limestone mines in the Midwest have been rehabilitated into commercial spaces with two big selling points: cheaper rent and lower energy bills. More

Most victims of workplace violence are women. Immigrants and Latinos are most likely to suffer fatal accidents at work. More