Carol Sharp thought she was on a roll!
In the five years she has been principal of Susan B. Anthony Elementary School, in a low income neighborhood in Sacramento, she turned around what was one of the lowest achieving schools in her district.
Sharp was even named California's 2002 principal of the year. She says she is proud of the strides she made.
"Five years ago, we sat down and we dreamed about having a school where everybody had access to what they need," says Sharp.
That meant special reading programs, classes in the arts, Saturday sessions and after-school teaching.
She says her children have doubled their performance on test scores. In fact, over the last few years there has been a dramatic rise in test scores state wide, as California pumped billions into its schools. But that was before both the state and national economies cratered. It was before California faced a huge budget deficit. It was at a time before the governor proposed drastic budget cuts.
"Oh, it's scary," says Sharp. "I'll be cutting back. [The children] will lack the basics, needs that I know have to be there, to increase my student achievement. This is devastating."
Is she worried that she's going to lose ground in education?
"Absolutely, and it pains me," says Sharp. "But, if I don't have the money, I can't give it to them."
And its not just education. California Governor Gray Davis is proposing cuts in almost every state program, including health care for the poor.
Dr. Robert Hockberger runs the emergency department at Harbor UCLA Medical Center, which serves some of the two and a half million uninsured in Los Angeles. He says the system is already maxxed out.
"These cuts will kill people," says Hockberger. "They can wait 8 to 10 hours to get into our emergency department for care. They can wait two or three days to get hospitalized from the emergency department because we have no beds. They can wait 8 to 10 weeks to get into a clinic for elective surgeries that they need."
"Everyone will complain to you, from the schools to the health care, the local law enforcement to the cities and counties, and they'll all be right," explains Gov. Davis. "This is not good. There were no easy choices, but someone had to make them."
Gov. Davis estimates the California budget will fall at a whopping $34 billion over the next year and half. That's more than a quarter of the state's budget, and more than the whole budget of almost every other state in the union. But, while Californians face the biggest mess, they're not alone. Hard times are coming to all.
"I think the financial picture of the states right now ranges from dismal to desperate," says Iris Lav, an employee of the Center on Budget and Policy Priorities, which tracks state finances.
She says it's the worst financial picture since World War II.
"There are a lot of causes," says Lav. "Unemployment is still rising and when people don't have jobs, they don't pay income taxes. We had a very sharp drop-off in the amount of capital gains income that people are getting. And that's hurt states' income taxes."
The states are short some $45 billion this year, and it gets worse. Almost every state is facing a budget deficit in the coming year, totaling between $60 and $85 billion. But unlike the federal government, most states are required to balance their budget.
So across the country, Democratic and Republican governors are eliminating highway, transit and other construction projects. They are also hiking tuition payments at colleges and universities, reducing welfare payments and more.
"We are all asked to make sacrifices in this budget," says Oregon Gov. Ted Kulongoski.
"We sent out notices months ago to eliminate 2,800 jobs," says Connecticut Gov. John Rowland.
Patty Fredette got one of those notices. So did Jeff Weign. They're psychiatric social workers, two of 11 being laid off from a mental health clinic in Middletown, Conn.
For Portia and Wayne Gilman, it means losing the caseworkers who have helped their son for 12 years.
We are very scared," says Gilman. "If we don't have Jeff Weign, there's a chance that our son will be hospitalized. That's the bottom line."
When Gov. Roland failed to win salary and benefits concessions from state employees, he says he had to resort to layoffs to help offset the state's projected $2 billion deficit next year. Just a few years back, Connecticut was living large — spending more money and cutting taxes.
The governor says he doesn't believe Connecticut made financial bad decision. "If we were the only state with a deficit you can say, 'Oh my goodness, you know, we didn't make any fundamental changes that were positive.' The truth is with 45 states facing a deficit; you've got a national downturn. It's a cycle."
To try to help break out of that cycle, Roland, a Republican, is proposing a new 40-cents-per-pack cigarette tax, and even an income tax increase.
Under his plan, millionaires would be taxed.
"It's a one percent surcharge on people that make one million or more," says Roland. "[It] probably affects 7,000 people in the state of Connecticut."
Back in California, Gov. Gray Davis, a Democrat, is also looking to raise some taxes, along with his program cuts.
"We only have an income tax increase on the wealthiest taxpayers," says Davis. "We have a sales tax, which everyone will pay. That's an increase of one cent. And a cigarette tax increase of $1.10 that smokers will pay."
The two governors, from opposing political parties on opposite coasts, are looking at some of the same remedies to close their budget gaps. But they disagree over one other possible source of revenue: Help from President Bush.
"First he should reimburse us all for the cost of Homeland Security," says Davis. "That would help local and state governments not only fight the war against terrorism, but also give them some relief. Secondly, any kind of stimulus package he can give us — money for infrastructure purposes and transportation purposes."
"I didn't wanna be governor because I'm gonna lobby the federal government to give us more money. It's a shell game," says Rowland. "It's not the federal government's money. It's the taxpayers money."
It makes one wonder why someone would want to be governor today. You can't make the constituents happy.
"All you can do is play the cards you're dealt," says Davis.
Copyright 2003 CBS. All rights reserved.