New York state is not alone in the financial troubles it faces.
Other states are confronting double-digit deficits with radical measures, most notably California. Last week, Gov. Arnold Schwarzenegger ordered the layoff of 22,000 state employees and slashed the wages of 200,000 others to the federal minimum wage of $6.55 an hour to help close a $15.2 billion deficit.
The National Conference of State Legislatures said that more than 30 states are facing deficits totaling $40 billion this fiscal year. While businesses and families may be holding the line or cutting back during economic hard times, state and local government spending in the second quarter rose by 7.8 percent while revenues went up 2.5 percent, according to U.S. Bureau of Economics statistics.
The number of government sector jobs rose in the year ending June 2008, but private sector jobs decreased.
"It's the strangest thing. Government keeps hiring even when times are tough," Jack Kyser, chief economist at the Los Angeles County Economic Development Corp., told USA Today.
In terms of amounts, New York's $5.2 billion deficit at the start of the fiscal year was second to California's deficit. In some states, though, the deficit was a much higher percentage of the spending plan with Nevada facing a 21 percent shortage and Arizona, Alabama, Maryland and Rhode Island all above 10 percent deficits.
New York Gov. David A. Paterson has resorted to spending cuts and a hiring freeze to close the gap this year. Nine states put hiring freezes in place, but states are taking other approaches.
Nevada, Minnesota and Massachusetts have dipped into their reserve funds. Maryland has increased its sales tax by 1 percent but will ask residents to legalize slot machines to generate revenue. Tennessee has cut spending on education and environmental programs but hopes 2,200 state employees will take a buyout offer to avoid layoffs.
The gloomy financial outlook could get worse next year, some analysts predict. Layoffs, job cuts and stock market losses will mean less income tax revenue for states in the coming fiscal year, making it even more difficult to balance hard-hit budgets.
