In further evidence of the recession's intensity, nearly half the states have already had to cut budgets they adopted just four months ago. The reason: revenues have fallen below their expectations.
Since July 1, when their fiscal year began, 21 states have been forced to cut new budgets after finding their careful revenue projections out of whack. And five states are still debating what to do about potential deficits.
"It's very unusual for 21 states to have cut their budgets just four months into the fiscal year," said Steven Gold, a fiscal analyst with the National Conference of State Legislatures. "The recession has been much more severe than people expected, and some legislatures and governors used rose-colored glasses in projecting their revenues for this year. It made it easier for them to pass the budget."
Since most states are legally required to balance their budgets, local politicians cannot emulate Washington by simply borrowing the money and delaying the day of decision. Instead, many are approaching Election Day surrounded by questions about whether they favor further spending cuts or tax increases.
In New York, for example, retiring Gov. Hugh Carey (D) has disclosed that lagging tax revenues have created a $549 million shortfall in the state budget. He said that revenues have failed to pick up because of President Reagan's "disastrous federal economic policies."
Carey also has chided the state legislature for overriding his vetoes of several popular spending bills last spring, when he was predicting a deficit of about $360 million.
"Carey does this every year and you can't take it seriously," responded Charles Dumas, an aide to Senate Republican leader Warren Anderson. "Our position is that there is no deficit, and if there is one, it will be small and insignificant and we'll take care of it after the election."
Lt. Gov. Mario Cuomo, the Democrats' candidate to succeed Carey, also blamed the deficit on Reaganomics, but he quickly vowed not to raise taxes to close the gap. Instead, he used the new figures to ridicule the tax-cutting plan being pushed by his Republican opponent, Lewis Lehrman.
Lehrman said the Democrats had greatly exaggerated the budget shortfall. "It's politically expedient for Carey to blame whatever budgetary problems he has on the Reagan administration," said Lehrman spokesman John Buckley.
Peter Lynch, the state's deputy budget director, said that 64,000 New Yorkers lost their jobs in the first quarter of the year, and that the easing of inflation is another factor holding down tax revenues.
Collections of income taxes are running $200 million below projections, he said, while sales taxes are down $51 million and business taxes down $125 million.
Similar charges are echoing across the Hudson, where New Jersey Gov. Thomas H. Kean has announced that a sudden dip in tax collections created a $62 million state deficit. The new Republican governor, who tried in vain to drive an increased gasoline tax through the legislature, said he might have to make emergency cuts in school aid and support a steep increase in transit fares.
"It's the recession," Kean said. "Our expenditures were right on line, and we were conservative in our revenue projections. We relied on good, experienced economic advisers.
"But our three major revenue sources -- income taxes, sales taxes and business taxes -- are all running at historic lows. And we're in better shape than some other states."
Alan Karcher, Democratic speaker of the state assembly, accused Kean of trying to "cover up" the real budget deficit to avoid embarrassing GOP candidates before the election. He said the shortfall actually is about twice as large as Kean's estimate.
"Tom Kean is acting as a front man for Reagan on these cutbacks," Karcher said. "Reagan created this problem with his economic policies and now New Jersey and the rest of the country is paying for it." Instead of cutting school aid, he said, Kean should support increased taxes on affluent residents who were most helped by Reagan's federal tax cuts.
In Indiana, where the unemployment rate is 11.3 percent, the expected budget deficit has grown from $38 million to $128 million since July, and some Democrats say it could go much higher. Republican Gov. Robert Orr has placed a freeze on hiring, purchasing and new construction projects.
"We were projecting a recovery in the economy to have at least started in the summer and to be picking up by this point," said state budget director Judy Palmer, but personal income taxes dropped substantially instead.
Fiscal analyst Gold said the problem is not limited to any one region. Since July, he said, Alabama has cut its budget by 15 percent and Ohio by 10 percent, while Idaho has placed its employes on a four-day work week. This follows a two-year period in which 40 of the 50 states raised cigarette, liquor, gasoline and other taxes, according to a National Journal survey.
Several cities also are feeling the pinch. Philadelphia revealed a $29 million budget shortfall last week. Washington Mayor Marion Barry insisted during his primary election campaign that the city was not facing a deficit, but this month he imposed tight spending restrictions on most city agencies because of lagging revenues.