State Budget Deficits Force Painful Choices

LOS ANGELES - The nation's governors are facing budgets that are trillions of dollars in the red. A new CBS News poll shows nearly three out of four Americans think their state budget is in bad shape. An overwhelming majority is not willing to cut spending for public safety. Of all the states, California is in the tightest squeeze.

CBS News correspondent Terry McCarthy reports California's new governor, Jerry Brown, inherited one of the worst state financial messes in the country. Brown began announcing cuts from day one. His first target: the cell phone.

Forty-eight thousand state workers with taxpayer funded cell phones must turn them in by next June and that includes the governor himself.

"I have [the cell phone] in my desk ready to turn in," said Brown.

With a deficit of $28 billion, eliminating cell phones will only save the state $20 million.

"The cell phones are a symbol," said Claremont College professor of politics Jack Pitney. "It won't save a lot of money, but it sends a real message."

And the message that all Californians are hearing: There is more pain to come. Much more. California may have the biggest overall debts in the nation but many other states are also struggling to close enormous budget deficits, either by cutting spending or increasing taxes, neither of which are very popular with voters.

According to a CBS poll, 77 percent of respondents prefer cutting spending to raising taxes. Almost three quarters of people asked think it is OK to keep running a deficit in an emergency situation.

In Illinois the governor wants to raise income taxes by an almost unthinkable 66 percent to help close his state's $13 billion deficit.

"This is a temporary income tax to deal with the immediate fiscal emergency our state faces, to pay the bills so we don't have severe cutbacks," said Ill. Gov. Pat Quinn.

In New Jersey, which already has some of the highest tax rates in the country, Gov. Chris Christie took the opposite route. Facing an $11 billion gap, Christie imposed stringent cuts on education and public employees. He even nixed a badly needed new tunnel between New Jersey and New York city.

"I can't print money," said Christie.

In California there was a double whammy. Public finances are so bad that Gov. Brown says that on top of spending cuts, the state will also have to raise taxes. But that will require a public referendum, expected this spring.

"The only real solution in the long run for the problems facing the states is national economic growth," said Pitney.

Until that happens, state governors will have to do whatever they can to reel in their deficits, and every action they take will make somebody unhappy.
  • Terry McCarthy

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