Several States Find Budget Agreements Elusive


Posted by Patrick Gleason on Tuesday, August 25th, 2009, 11:47 AM PERMALINK


All but four states start their new fiscal year on July 1st and must have a budget complete by that time. Of these 46 states, Arizona, Connecticut, and Pennsylvania have yet to pass a budget despite being well over 50 days into the new fiscal year.

Arizona Gov. Jan Brewer (R) has a budget sitting on her desk awaiting her signature. However, it remains unclear whether she will sign it given it is the same budget that she vetoed in early July. The reason she vetoed that budget and many expect that she will reject this too is due to the fact that it doesn't contain referral of the sales tax increase that she has remained hell-bent on getting since the beginning of the year. Brewer faces opposition from members of her own party who refuse to sign off on any tax increase in the middle of a recession.

Upon receiving the latest budget last week, Brewer tweeted: "Sitting in my office looking at the bills that were just presented to me..going to have to make some BIG decisions." That may be the understatement of the month. Treasurer Dean Martin recently notified the press and public officials that the state will run out of cash in October and that banks will not grant a line of credit if the state has not passed a budget by that time. The deadline for Brewer's signature is tomorrow.

In Connecticut the dispute is not whether to raise taxes but by how much. The state is in the midst of the longest budget standoff in its history as the Governor and the Democrat controlled legislature remain unable to reach a deal. Facing an $8 billion deficit over the next two years, Democrat legislators are calling for a $1.8 billion income tax hike on high earners.  Gov. Jodi Rell (R) prefers to raise taxes to a lesser degree on businesses, tobacco, and alcohol. Lawmakers are slated to return to the capitol on Thursday.

Pennsylvania is another state mired in its most protracted budget fight in decades. Gov. Ed Rendell (D) and legislative Democrats originally sought higher taxes on income, tobacco, and energy production. Now that the income tax is off the table the Governor is looking to apply the state's 6% sales tax to products and services that are currently exempt.   Republicans who control the Senate and are a narrow minority in the House remain firmly opposed to any tax increases and have introduced their own budget, HB 1493, which closes the budget gap without raising taxes or cutting education spending. A deal is expected sometime in September but the apparent lack of urgency among some lawmakers have many worried that the stalemate could continue well into October.

Stay tuned for further updates on the three remaining budget standoffs.

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