ABC News’ Dr. Mirjana Jojic reports:

With the U.S. economy in crisis, health care budget cuts are rampant and mental health services are suffering.

In March, the National Alliance on Mental Illness (NAMI), released a report detailing the tremendous state cuts to mental health care for children and adults. However, by June more cuts were underway, and NAMI has now released an updated report looking at the continuing crisis through 2012.

“[At the time of our last report], states were just starting to work on their budgets. We wanted to assess what they were doing in terms of continued cuts, and give people on the ground information that they might be able to use to advocate for no further cuts when legislatures start to convene in January [of 2012],” said Ronald Honberg, director of legal and policy affairs for NAMI.

NAMI’s new report focuses on individual state allocations for mental health services such as community centers, access to psychiatric medications and housing provisions. It found that while some states have increased funding of these services, the numbers are small in comparison to the deep cuts other states are implementing.

California and New York have the largest mental health budgets, but between 2011 and 2012, California cut its funding by $177.4 million and New York by $95.2 million.

Those are huge dollar amounts for two of the largest states. However, they weren’t the worst. Between 2009 and 2012, South Carolina cut 40 percent of its mental health allocations, and Alabama, Alaska, Illinois and Nevada weren’t far behind.

This is worrisome news considering that Alaska and Nevada have the highest and second highest suicide rates in the country, respectively.

The cuts are wreaking havoc on much more than mental health services.

“Patients in crisis have nowhere to go and so they end up in emergency rooms. The ER can’t dump people, but they have nowhere to put them, so patients are boarded in emergency rooms,” Honberg told ABC News.

Law enforcement officials are also getting involved. Police have become first-line responders to mental health crises they aren’t trained to deal with, and prisons, already overcrowded, are the new psychiatric hospitals.

“State [mental health] facilities are closing and there is nowhere for people to get treatment. [The consequences of the budget cuts] are turning out to be more expensive than simply providing people with mental health services,” said Honberg.

The NAMI report also describes how states are moving more money into Medicaid to offset federal Medicaid budget cuts to mental health. This shift has left non-Medicaid patients stranded without services.

Honberg was particularly concerned about this shift in resources.

“Medicaid is the most important source of funding for community mental health,” Honberg said. “With the stimulus, Medicaid was protected, but now [the stimulus] has expired, and that worries me more than state budget cuts.”

Is there any hope for the millions of Americans struggling with mental illness?

Despite the downsizing, states like Iowa have increased budgets by 35.5 percent, North Dakota by 24.2 percent, and mental health spending is also on the risk in Arizona, Washington and Michigan.

“We’re hoping that we’ve seen the worst of it,” said Honberg. “Crisis breeds opportunity, and when you’re faced, as a state, with belt tightening, it’s a chance to look at what you do and how you can do it better.”

So what can people do? One thing is to educate legislatures and policy makers on the problem and the increased need for mental health aid. The other is for agencies providing that aid to improve record keeping and data collection so they can be a more powerful lobbying force.

Honberg believes, “The mental health system has problems, too. Everyone needs to be accountable and take advantage of the opportunities for improvement moving forward.”

One thing is certain, he said: “The first thing we need do is stop cutting. There is no more fat to cut.”