State Deficits Cited as Proof of Recession

At least 30 states from coast to coast face budget deficits, further proof the nation is in a recession, it was reported today.

The deficits range from $1 billion each in California and New York to $42 million in Tennessee, according to studies by the National Assn. of State Budget Officers and the Boston Globe.

“It’s unusual to have this many states in trouble when we’re really just going into a recession,” Jerry Miller, head of the state budget group, told the newspaper. “The last time things were this bad, in 1982-’83, we were already in a recession.”

Deficits were reported from California to Florida and Maine. The surveys concluded that the faltering national economy has dampened business output, leading to a falloff in revenues from state business taxes.

“Corporate taxes are the most volatile and have fallen the greatest,” said George Leung, head of state ratings at Moody’s Investors Service.

Recession fears have put the brakes on much retail spending too, he said. “Studies show consumer confidence has dropped to record lows.”

The less consumers spend, the more businesses are likely to lay off workers. State governments also have trimmed their payrolls. In Massachusetts, for example, up to 10,000 state jobs have been cut.