States Feeling Budget Squeeze

One month after the terrorist attacks on New York and Washington, D.C, the shock is being felt in state capitols around the country.

Governors of more than a dozen states are calling for budget cuts, hiring and wage freezes, and maybe even higher taxes to offset growing budget shortfalls.

And in most cases, the attacks are being blamed.

California May Lose Billions

Today in California, Gov. Gray Davis warned all state agency and department to prepare to cut their budgets by 15 percent.

"The terrible tragedy of Sept. 11 has injected even more uncertainty into our economy," said Davis. "And we must prepare for greater revenue reductions as a result."

State revenues already are running $1.1 billion below projections for the first three months of the fiscal year, which began July 1.

State Budget Director Ted Gibson said, "we could see losing billions of dollars." Some lawmakers put that shortfall at $4 billion.

Shortfalls Around the Nation

It?s a scenario being played out all across the country.

Florida: In Florida, tourism has dropped dramatically because of the attacks and that is hurting the state?s revenues. It's estimated than more than $1.5 billion will be lost by the end of the fiscal year.

Gov. Jeb Bush doesn't want to raise taxes and he's already talking about eliminating new programs just added to the budget three months ago but not yet implemented.

Bush has called a special session of the state legislature to deal with the crisis.

Kentucky. The state is looking at another $200 million in budget cuts. State forecasters yesterday lowered state revenue projections, saying the impact of Sept. 11 will cost the state $171 in lost revenue and wipe out any reserve.

North Carolina. Gov. Mike Easley said that the state's "economic slowdown has worsened significantly since Sept. 11." The state brought in about $155 million less in taxes and revenues than expected over the past three months, most of the decline occurring after the terrorist attacks.

Agencies have been told to cut 4 percent from their budgets. State renovations and repair projects have been halted.

Georgia. Gov. Roy Barnes has ordered all department heads to cut current year spending by 2.5 percent and next year spending by 5 percent.

Barnes told lawmakers that he's looking to cut $600 million out of this year's budget, or roughly 4 percent. Revenue is down 6 percent for the first two months of the fiscal year.

Michigan. The state's manufacturing sector was already in a recession Now, Gov. John Engler has to deal with an even greater decline in tax revenues and the increasing layoff tolls.

Michigan is looking at up to $900 million in budget cuts. Engler vetoed large portions of school aid, including remedial reading and bilingual education , from a spending bill for the 2002 school year because of concerns about the economy.

Hawaii. Gov. Benjamin Cayetano said the state is having "the worst economic crisis" in its history. The impact of terrorism on the tourism industry has been devastating, he added.

Hawaii depends on the tourism and travel industry for more than 25 percent of its economy. And 26 percent of visitors to the islands are from Japan. The governor traveled to Japan Wednesday to assure the country that his state is safe.

Oregon. Gov. John Kitzhaber ordered state agencies and schools to find $240 million in savings through administrative cuts and to identify additional program cuts. That's about 2 percent of the overall state budget.

The state was already lagging behind revenue projections and had forecast a $300 million drop in revenues. Now economists and political leaders expect that shortfall to worsen because of the terrorist attacks.

Ohio. Gov. Bob Taft ordered state agencies to cut budgets by 6 percent to offset a $600 million deficit. The state's Department of Mental Health said it may be forces to close four of the state's nine psychiatric hospitals. And the Department of Rehabilitation and Correction said it may have to close one prison.

Other states saying they will have to make budget cuts because of the terrorist attacks:

Arizona.Up to $1.6 billion and other budget changes.

Washington. Up to $1 billion.

Connecticut. An estimated $88 million.

Illinois. An estimated $50 million.

Maine. An estimated $10 million.