State, City Governments Following Private Sector Employment Cues

He pointed to a budget proposal in November to furlough employees one day a month. That was rejected, and now it's two days a month.

The furloughs apply only to employees in the executive branch. They will occur on the first and third Fridays of each month and the state will gain additional savings those days from utilities and maintenance as the mass furloughs will mean closure of several state offices.

Exempt are some highway patrol officers, but not public safety and emergency preparedness employees.

"If California businesses and families are tightening their belt, the state government needs to do the same thing," McLear said.

If Bloomberg's proposed plan doesn't work the way he wants it to, the job losses would amount to amount to about 6.5 percent of the city's workforce.

In his weekly radio show today, Bloomberg said he was more pessimistic than the official financial forecast.

"If things get worse, then all bets are off," he said. "If labor doesn't come through with things we need, then all bets are off. The city budget is made up of a few things we can't control, and labor."

New York City's latest round of financial woes is largely caused by a sharp decline in tax revenues, forecast to drop by $800 million in 2009 and another $2 billion in 2010.

"All governments are facing up to the fact that tax revenues are declining because the economy is going down," Bloomberg said during the show. "People are getting hurt. Some people are losing their jobs, not everybody, some people are losing their homes, not everybody, but everyone is worried. And they have a right to be."

Looking to Obama Package for Relief

Budget deficits were already a problem back in the fall, when several states announced that the Wall Street crisis had wiped out large chunks of their pension investments -- hundreds of millions of dollars in some cases.

Zandi said that while no state government is immune to budget deficits, some are worse off than others. Florida is facing an especially tough future, he said, calling it "arguably the weakest economy in the country."

Florida's estimated budget shortfall is a reported $2.3 billion.

That state's biggest worry, Zandi said, is the housing crisis, with migration having not only stopped but reversed, which is extremely unusual.

The Sunshine State, he said, is "getting creamed in the collapse."

So what's the solution?

Zandi said the states' best hope right now is President Obama's $819 billion stimulus package, approved by the House Wednesday and up for a vote in the Senate next week.

If the package passes, Zandi said, states will face "tough choices, but they won't be as dire."

And the trickle-down of funds, he said, would likely be very fast, possibly as early as spring or summer.

States would see federal aid not in the form of lump sums to their general funds, but rather through a variety of programs including Medicaid, education and public works projects.

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