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The worst recession since the 1930s has caused the steepest decline in state tax receipts on record. As a result, even after making very deep cuts, states continue to face large budget gaps. New shortfalls have opened up in the budgets of at least 41 states for the current fiscal year (FY 2010, which began July 1 in most states). In addition, initial indications are that states will face shortfalls as big as or bigger than they faced this year in the upcoming 2011 fiscal year. States will continue to struggle to find the revenue needed to support critical public services for a number of years.
New gaps in 2010 budgets. An increasing number of states are struggling to keep their 2010
budgets in balance. Because revenues have fallen short of projections, mid-year shortfalls have
opened up in 41 states — some of which have already addressed them — totaling $38 billion or
7 percent of these budgets.
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