CBNNews.com - Are we in a recession or aren't we? The question has plagued the U.S. for a while now. But for some states it's a moot discussion, according to a report to be released Friday by the National Conference of State Legislatures.
Many states' finances appear to be in a recession, a survey of all 50 state fiscal directors concludes. And matters look even worse for the fiscal year that starts July 1 in most states.
The weakening economy is affecting tax revenue in several ways.
People's discretionary income is being eaten up by higher food and fuel costs. And the tanking housing market means people are spending less on furniture and appliances associated with buying a house.
Grim in the East, Bleak in the West
The situation is grim in Delaware, with a $69 million gap this year, and bleak in California, with a projected $16 billion budget shortfall over the next two years, the report said. Florida does not expect a rapid turnaround in revenue because of the prolonged real estate slump there.
By the time mid-April arrived, 16 states and Puerto Rico were reporting shortfalls in their current budgets as the revenue those budgets were built on - usually, taxes - fell short of estimates. That's twice the number of states reporting a deficit six months ago.
The NCSL said the news is even worse for the upcoming fiscal year, with 23 states and Puerto Rico already reporting budget shortfalls totaling $26 billion. More than two-thirds of states said they are concerned about next year's budgets.
Some states "have declined so much that they appear to be in a recession," the NCSL report said.
It also noted the silver lining for states where the economy is based on energy, such as North Dakota and Wyoming. Alaska is making so much money from oil that it announced an estimated surplus next year of $8 billion, almost twice the state's annual budget.
In North Dakota, revenue is above legislative predictions by 13 percent, and in Louisiana, the oil and gas sector is robust.
"For energy-producing states, the fiscal situation is strong and the outlook is good," the report said.
Among other findings:
-More than half the 16 states reporting deficits this year have cut spending, including $1 billion by Florida lawmakers last year and across-the-board cuts in Nevada. At least eight states are debating raising taxes or fees, including a proposed $1-per-pack cigarette tax increase in Massachusetts to raise $175 million.
-Twelve states, including Georgia, Idaho and Illinois, reported that personal income tax collections were failing to meet estimates, and in eight of these, collections were even below a reduced forecast.
-Many states, including Alabama, Arizona, Massachusetts, Minnesota, Nevada and Wisconsin, plan to tap their rainy day funds, which contain money set aside for fiscal emergencies. Nevada may use its entire rainy day balance.
Source: The Associated Press