The Wall Street Journal reports that at least ten states are planning major sales or income tax hikes to close budget gaps: Arizona, Connecticut, Delaware, Illinois, Massachusetts, Minnesota, New Jersey, Oregon, Washington and Wisconsin.
The most interesting of these, I think, is Arizona -- which, in addition being one of the states hardest hit by the recession (its budget gap this year is $3.4 billion) has both a Republican governor and a Republican legislature. They are now facing off over $1 billion in proposed tax increases.
This happens because states, unlike the federal government, cannot deficit spend. And I would bet that as state tax revenues continue to tumble there will be more state-level Republicans who are willing to stomach tax increases. The breakdown of state budget shortfalls looks pretty bipartisan:
Is there a semi-simple explanation for why states cannot deficit spend?
ASKlein - It is written into almost all state constitutions that they cannot deficit spend, i.e. they must balance their budgets every year. The only state permitted to deficit spend is Vermont.
LOL! It's like the stimulus battle, part 2. Republicans will loudly crusade against taxes and "the welfare state", but then when the chips are down they'll quietly go back and vote it up. Because everyone's against taxes until they remember how much life sucks without social spending.