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Pastimes : Clown-Free Zone... sorry, no clowns allowed -- Ignore unavailable to you. Want to Upgrade?

To: PMG who wrote (117564)	8/19/2001 6:34:42 PM
From: PMG	Respond to of 436258

LATIMES STATES FEEL THE PINCH At least seven states are imposing across-the-board spending cuts. Several others are trying to hold the line with hiring freezes. And some have tapped money from the settlement with tobacco companies--a onetime windfall often earmarked, with much hoopla, for public health--to cover the routine costs of keeping schools open and potholes filled. A few states have not yet been able to pass balanced budgets. The choices are just too tough. North Carolina Gov. Mike Easley went on television Thursday to prepare his citizens for the worst: a budget that, if he gets his way, would cut deeply into public services and raise the sales tax by a penny. "We are facing a financial crisis," he warned, "unlike any our state has seen in recent history." In New York, the pinched finances have caused such chaos that Gov. George Pataki filed suit Friday against the state Legislature. He is trying to block the austere budget lawmakers approved, arguing that it cuts from the wrong programs. To be sure, there are some bright spots, especially in the West and Southwest, where a few states are cashing in on the energy boom with banner years. Wyoming, for instance, gets much of its revenue from mineral taxes; with oil and gas exploration soaring, there's a $220-million budget surplus. And though tax revenues are down in California, the state still has enough money to shore up its rainy-day fund. The budget passed last month set aside $2.5 billion as a reserve. But the Midwest and South, which tend to rely more heavily on sales and manufacturing taxes, are facing grimmer times. Tennessee may be an extreme example: Sales tax receipts, which economists there count on to increase 6% a year, have risen just .75% so far this year. State budget analyst Gerald Adams' assessment of that statistic: "Ugh." "It's horrible," he added. "All the fiscal people are very concerned." And the sales tax slide is not the only concern for budget analysts. The plunging stock market has wiped out so many capital gains that personal income tax receipts are much lower than anticipated. Creeping unemployment has also cut into income tax projections. With all the layoffs, dot-com closings, mergers and moves, corporate tax revenue has been volatile as well. Plus, lawmakers were generous in the good years, often spending instead of saving, handing out tax breaks that are now starting to pinch. Missouri alone refunded $1.7 billion in taxes during the late 1990s. The state could not build a rainy-day fund, even if legislators had the discipline to do so, because a constitutional amendment caps the amount of revenue the government can take in. Any excess has to go back to the taxpayers. "When there were good times, the state certainly wasn't able to live off the fat, and now, with the recession, it's taken a bad hit," said Dave Robertson, a political scientist at the University of Missouri in St. Louis. Thus, less than two months into the current fiscal year, Missouri Gov. Bob Holden has asked every state agency to prepare to cut its budget by 18%. He has characterized the cuts as "withholdings," money he'll restore at the end of the year if the economic picture brightens. His spokesman makes that point, then snorts a pained chuckle and mutters, "Yeah, right."