States Facing Big Budget Deficits Seek Solutions Robert Siegel talks with state capital reporters in Nevada, New Jersey and Florida about how those states will address looming budget shortfalls. We also hear from Ohio's Democratic Gov. Ted Strickland, who successfully brokered a solution to his state's financial woes last year.
NPR logo

States Facing Big Budget Deficits Seek Solutions

  • Download
  • <iframe src="" width="100%" height="290" frameborder="0" scrolling="no" title="NPR embedded audio player">
  • Transcript
States Facing Big Budget Deficits Seek Solutions

States Facing Big Budget Deficits Seek Solutions

  • Download
  • <iframe src="" width="100%" height="290" frameborder="0" scrolling="no" title="NPR embedded audio player">
  • Transcript


This is ALL THINGS CONSIDERED from NPR News. I'm Robert Siegel.

A few minutes now on the state of the states. President Bush may plug an economic stimulus in tonight's State of the Union address. But if you are a governor bound by your state constitution to balance the budget, your annual message is likely to be short on stimulus for growth and long on response to a revenue shortfall.

Governor ARNOLD SCHWARZENEGGER (Republican, California): Talking about fiscal responsibility sounds so cold. Many have a representative for AIDS patients or poor children or the elderly sitting across from you. It's one of the worst things about being governor.

Governor ELIOT SPITZER (Democrat, New York): Where's the money to come from? We should unlock some of the value of the New York state lottery either by taking in private investment or looking at other financing alternatives. As we do this, we will assure that the state continues to receive the more than $2 billion annually for K-to-12 education the lottery now provides.

Governor TIM KAINE (Democrat, Virginia): Virginia has been affected by the cooling national housing market. Today, too many Virginians face the threat of foreclosure. Rising energy prices, tightening credit requirements, a turbulent stock market continue to make our economy very volatile, and we must monitor and will monitor the situation very closely.

SIEGEL: Governors Schwarzenegger of California, Spitzer of New York, and Kaine of Virginia are not the only trio singing the state budget blues. The Center on Budget and Policy Priority says at least 25 states face budget shortfalls this year, and many states haven't yet reported on their fiscal outlook.

And we're going to hear about four states now from reporters who cover the budget in three state capitals and also from the governor of Ohio.

And first to Reno, Nevada, and reporter Geoff Dornan of the Nevada Appeal. Geoff Dornan, how big a shortfall does Nevada face and what does Governor Jim Gibbons, the Republican, intend to do about it?

Mr. GEOFF DORNAN (Reporter, Nevada Appeal): The shortfall, as of last week, was $564.7 million, and Governor Jim Gibbons has already gone ahead in making cuts. Primarily, he's taken a 4.5 percent across-the-board general fund reduction. And we have rainy day fund, which is going to give us about another 230 million of that total.

SIEGEL: And to put this in some perspective, Nevada talks about a budget shortfall in the hundreds of millions of dollars. You compare to what Governor Schwarzenegger is facing in Sacramento, it's - it may be a rainy day fund but it's a mere drop in the bucket.

Mr. DORNAN: Well, I think Governor Schwarzenegger's budget cuts are greater than the state of Nevada's budget.

SIEGEL: Where is the revenue shortfall? Why is it that Nevada's tax income is so much lower this year than had been anticipated?

Mr. DORNAN: It's primarily the sales tax numbers. Sales taxes are down significantly. Over the biennium, the projection is about $168 million. Then the other problem is gaming taxes, which have fallen off in the past couple of months. Gaming taxes plus the entertainment taxes that companies account for - just about another third of the state's general fund revenue.

SIEGEL: That's Geoff Dornan, who is a reporter for the Nevada Appeal. He spoke to us from Reno.

And now on to Florida, where Governor Charlie Crist and his fellow Republicans in Tallahassee are looking at perhaps $2 billion in budget cuts to makes this year.

Jim Ash is capital bureau chief for the Tallahassee Democrat. Jim Ash, how are Floridians experiencing revenue shortfall in Florida?

Mr. JIM ASH (Capital Bureau Chief, Tallahassee Democrat): Well, the Floridians that rely on state services are looking at $2 billion in budget cuts coming up next year. So right now, if I were living in Florida and depending on Medicaid or state-sponsored health care, I would be real nervous.

SIEGEL: Florida is a state that doesn't have an income tax, so when it comes to revenues, you're really talking about sales taxes there?

Mr. ASH: That's correct. They make up practically the entire revenue picture of what lawmakers get to spend in the general revenue budget.

SIEGEL: So a downturn in the economy is felt rapidly in Tallahassee in that case.

Mr. ASH: Especially when people stop buying homes and large-ticket items like automobiles, appliances - the sales taxes that come in from them make up a hefty portion of our revenue.

SIEGEL: That was Jim Ash of the Tallahassee Democrat in Tallahassee.

Now on to Trenton, New Jersey, and Joe Donahue, who is state budget writer for The Star-Ledger.

And, Joe, Governor Jon Corzine, a Democrat, seems to be taking the drive-by approach to find more state revenue. Do I have that right?

Mr. JOE DONAHUE (State Budget Writer, The Star-Ledger): Yeah, much to the consternation of a lot of New Jersey drivers. If the governor's plan went through as is, which the Senate president recently said would not happen, tolls would go up about 800 percent between now and 2022.

SIEGEL: Eight hundred percent.

Mr. DONAHUE: Yeah.

SIEGEL: We're talking about the New Jersey Turnpike, and…

Mr. DONAHUE: Turnpike.

SIEGEL: Garden State Parkway?

Mr. DONAHUE: The Garden State Parkway and Atlantic City Expressway.

SIEGEL: Do you think Governor Corzine is onto something here? That in the age of what in the east is known as Easy Pass and so many motorists have a transponder attached to the inside of their windshield and you drive by and just rack up a bill on the turnpike as you're driving on it; that it may be easier to get away with toll increases than if every motorist has to fumble for change every few miles on the highway?

Mr. DONAHUE: Oh, there's no doubt about that. I mean, for one thing, this is what Europe has been doing for decades - and Australia and South America. So to a large extent, the North American politicians are just sort of waking up to this. You know, Chicago and Indiana did outright private takeovers of their toll roads. And - I mean, that - this is definitely going to be something that a lot of states in chronic fiscal trouble are going to have to seriously consider because, you know, the options are limited.

SIEGEL: Joe Donahue of The Star-Ledger - and you and I know it's really the Newark Star-Ledger (unintelligible) - thank you very much for talking with us.

Mr. DONAHUE: All right. Thank you, Robert.

SIEGEL: And now we turn to Columbus, Ohio, and one of the governors who actually has to deal with one of these revenue shortfalls. Ted Strickland is a Democratic governor.

Welcome to the program.

Governor TED STRICKLAND (Democrat, Ohio): It's good to be with you.

SIEGEL: Tell me about the problems you face and how you're going to deal with them.

Gov. STRICKLAND: Well, we face a budget shortfall ranging from $733 million up to the possibility of a budget shortfall of $1.9 billion depending upon what happens with the economy in the weeks and months to come.

SIEGEL: You served several terms in the House of Representatives in Washington.


SIEGEL: I'd like you to describe the difference between federal budget policy and economic policy, where you can indulge in more deficit financing, if you want, and state government fiscal policies where most governors have to balance a budget.

Gov. STRICKLAND: Well, I have a constitutional responsibility to maintain a balanced budget, and so there's no wiggle room. We're either going to have to get more assistance, more revenue, or we're going to have to cut services to the people. And the states are absolutely operating where the rubber meets the road, so to speak, and the federal government, I believe, needs to be fiscally responsible in ways that perhaps they haven't been.

SIEGEL: In New Jersey, we have heard, where the rubber meets the road, Governor Corzine wants increased tolls on the turnpike; bring in more money on people who are driving on the highways. Can you do that?

Gov. STRICKLAND: Well, we do have a turnpike, and that's something that, you know, obviously we can look at, but it is not something that is going to, at least in Ohio situation, meet the, you know, the need that we have.

SIEGEL: In Nevada, the gaming tax brings in a lot of money. You've been against slot machines. Maybe some more slot machines would bring in some more revenue to Ohio.

Gov. STRICKLAND: You know, I just don't think that, for Ohio at least - other states can make, you know, make choices which seem to be best for them, but the people of Ohio have been rather firm in stating on numerous occasions that they do not think that the way to meet government's responsibility to its people should come from greatly expanded casino-type gambling.

SIEGEL: Well, Governor Ted Strickland of Ohio, thank you very much for talking with us.

Gov. STRICKLAND: Thank you so much.

SIEGEL: And in addition to Governor Strickland, we heard from reporters in New Jersey, Florida and Nevada - three states among more than two dozen facing budget shortfalls.

Copyright © 2008 NPR. All rights reserved. Visit our website terms of use and permissions pages at for further information.

NPR transcripts are created on a rush deadline by Verb8tm, Inc., an NPR contractor, and produced using a proprietary transcription process developed with NPR. This text may not be in its final form and may be updated or revised in the future. Accuracy and availability may vary. The authoritative record of NPR’s programming is the audio record.