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Tax Guru-Ker$tetter Letter
Thursday, July 25, 2002
State Budget Problems

As has been discussed here on a number of occasions, almost all of the state governments are having budget shortfalls. I found an extensive report on how they are addressing these problems from the National Conference of State Legislatures. It's long and only really interesting to other numbers geeks like me.

However, what I found interesting is this summary of how the states are planning to deal with their shortfalls.

Cutting spending (26 states)
Tapping a variety of state funds (23 states)
Using tobacco settlement funds (16 states)
Increasing taxes (16 states)
Tapping rainy day funds (12 states)
Raising fees (10 states)

I was actually quite surprised to see that 26 states would even consider cutting their spending, because normally that side of the equation is untouchable. Obviously, since we don't yet have 103 states, some states are planning more than one approach. Many people would consider raising fees and raising taxes to be essentially the same thing.


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