States Feel Strain as Budgets Fall Short

State governments are cutting services and raising taxes to make ends meet.

Dec. 2, 2008— -- In Chicago, the lighting of the holiday Christmas tree is a sign of the season. But today, it's also a sign of the times.

The tree is traditionally lit the day after Thanksgiving, but this year there were no workers to light the tree because the state could not afford the holiday pay. Officials told workers to take the day off in an attempt to save money.

Also in Chicago, many parking meters are shooting up to $1 per hour, and city lawmakers could decide to cut hundreds of jobs.

"I think what we're doing isn't the right move. I think we're laying off the wrong people," said Billy Ocasio, a Chicago alderman. "We're laying off the people who do the work instead of the people behind the desk."

Across the country, the steep drop in tax revenues is bringing deep budget cuts.

In California, Gov. Arnold Schwarzenegger declared a fiscal emergency today, as lawmakers stare at a possible $28 billion deficit in the coming year and a half. Schwarzenegger ordered lawmakers to convene for a special session to make cuts, likening the state to an accident victim.

"We wouldn't spend hours debating which ambulance we should use, which hospital, or which treatment," he said in a press conference. "No, first we would stop the bleeding."

At a recent meeting in San Francisco, armed officers had to be called in when protestors got fired up at a meeting of the University of California Board of Regents over pension cuts and tuition hikes. They're fighting cuts in pensions, a 9 percent hike in student fees and some 10,000 admissions spots at state universities that could be cut for next year.

California isn't the only state in crisis. At a session of the National Governors Association today, Republican and Democratic governors alike met with President-elect Barack Obama in Philadelphia, seeking help to ease their strained budgets.

Hard-Hit Cities Make Difficult Choices

While Obama tried to reassure states that he will invest in infrastructure, the president-elect acknowledged that the economic recession is forcing states and cities to prioritize.

"These are difficult times and we're going to have to make hard choices in the months ahead about how to invest precious tax dollars and how to save them -- hard choices like the ones you're making right now," he said.

Choices like the ones in the small city of Duluth, Minn., where television cameras captured one woman who was turned away at City Hall -- the doors unexpectedly locked. Officials decided to shut down City Hall for four days this year, in hopes that the saved money will help keep 20 full-time city workers employed.

A similar scene is playing out in Phoenix, where the mayor has asked employees to work one day a month for free and to give up their pay raises next year.

In Nashville, Tenn., lawmakers face the excruciating task of cutting $20 million from the state's education budget, which means less funding for much-needed after school programs, tutoring and remedial programs.

Even zoos aren't immune. In New York State, lawmakers are considering cutting budgets by more than half. Animals must be fed, so workers say that programs for the public will be cut.

In Spokane, Wash., the animal shelter is now closed two days a week simply because they can't afford to staff it.

As cities, towns and school districts across the country are forced to make drastic cuts, lawmakers say that the real problem is that it's just the beginning.