Budget Nightmare: 10 Most Broke States

Big Layoffs

With nearly $800 million in tax increases, Oregon is among a handful of states to recently approve big tax hikes. Budget cuts announced in May anticipated the layoffs of 1,700 state employees and a 14 percent budget cut in higher education, for $2 billion in cuts.

Oregon's lawmakers traditionally meet just every other year, but state legislators met last month to pass a $6 billion budget for the state's K-12 schools, despite concerns from Gov. Ted Kulongski. However, schools still have to cut back, as evidenced by bigger classes, fewer music and athletic programs and a freeze in employee pay at many districts.

While public school students were spared from deep cuts, the same cannot be said for the state's working poor, seniors and disabled. The Department of Human Services will receive $387 million less than what officials say is needed to sustain their programs. Among the largest cuts is a $41 million reduction in a daycare program for low-income families.

The state legislature will reconvene in February.

Vermont: $278 million or 25 percent of its budget

Compared to the other states, Vermont's $278 million shortfall might not seem like much. But then again, this tiny New England state doesn't really spend much, so the shortfall actually takes up a large portion of the budget.

After a special legislative session last month, Vermont lawmakers approved a state budget. But the state's financial woes have translated into cuts across many sectors.

Lawmakers tapped money from the state's education fund to pay overall expenses, resulting in a loss in state aid of about $18.4 million to the Education Fund for fiscal year 2010. Lawmakers also enacted a provider rate cut from 4 percent to 2 percent for contracted healthcare services, impacting mental health providers, sign language interpreters and rehabilitation programs for children.

The state is also taking cuts that could impact its environment, a major selling point in its important tourism industry.

Vermont eliminated approximately 10 percent of the jobs in its Agency of Natural Resources, a state department dedicated to protecting the environment. Most of the job cuts were made among the agency's solid waste management staff.

Vermont now charges a sales tax for digital music downloads and liquor, has raised tobacco taxes and will shut down several highway rest areas.

Washington: $3.6 billion or 23 percent of its budget

Washington state's deficit has taken its toll on social services for residents. Lawmakers predicted budget cuts would result in the loss of 8,000 state jobs and 40,000 fewer people receiving state-subsidized health insurance. There are already 14,000 people on the waiting list for that program.

In April, state legislators approved plans to cut the state's public education system by nearly $800 million, though some school districts will receive money from the federal stimulus package. Measures passed this year will also allow the state to raise the current 7 percent cap on undergraduate tuition increases to up to 14 percent at public universities. Approximately 9,000 fewer students are estimated to be able to enroll in a state university as a result.

A 70 percent cut in Medicaid for low-income seniors took effect on July 1, forcing elderly care providers to lay off staff.

Connecticut: $4.1 billion or 23 percent of its budget

Rounding out the worst 10 is Connecticut, where there is currently no budget in place after Governor M. Jodi Rell vetoed Democratic legislators' budget proposal earlier this month. Rell issued a 34-page executive order to provide $1.4 billion for state operations for the month of July.

Last September, the state's Department of Children and Families budget took a heavy hit, including a more than $9.8 million cut in residential services and shelters for children in state custody. The Department of Developmental Services and the Department of Social Services lost more than $8 million and $5 million respectively. Rell's latest proposal calls for $5.4 million cuts in the state's library services.