Top 10 States in Fiscal Peril

Furloughs are also meaning longer waits for unemployment claims processing and other services, in some states, and reduced numbers of police and firemen to protect public safety.

"What's also overlooked," Kreisberg said, "is the tremendous increase in stress on the workforce at a time when workloads have increased and pay has decreased." Staffing reductions and increased demand for state services during the economic downturn are making it impossible for some workers to afford taking time off.

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"Many state workers have said they simply cannot afford furlough days. They work from home or sneak into the office out of extreme dedication and passion for public service," Kreisberg said.

Is there a light at the end of the tunnel for states in murky financial waters?

Kreisberg says unless states can devise creative solutions, the coming year will be "absolutely disastrous not just for state workers but for the entire economy."

The Pew Center's Urahn agrees. "It's tough to continue to do across the board cuts in states like Michigan, where you've cut for years and years and years," she said. "I think it's gonna be tough... the challenge is that it's not a 'this-year' problem; it's a structural problem with how states spend."

VIDEO: The presidents proposal to Congress includes tax increases for the wealthy.
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And those are the types of problems that don't tend to get resolved quickly. National Governors Association director Raymond Scheppach predicts, "states will not fully recover from this recession until late in the next decade."

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