Monday, March 31, 2008

States Are Hit Hard by Economic Downturn

States Are Hit Hard by Economic Downturn

By Keith B. Richburg and Ashley Surdin

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Many cutbacks felt by most needy.

New York - In Illinois' Cook County, women in poor neighborhoods no longer have access to free mammograms from two mobile vans testing for breast cancer.

In Michigan, hikers will find about 20 campgrounds closed, and scientists are ending their studies of fish populations in the Great Lakes.

In New Jersey, state workers are being laid off, and at least one town is canceling its traditional Fourth of July fireworks.

And in California's San Fernando Valley, Everardo Orozco, 53, who has AIDS, exhausted his medical benefits and can no longer afford the drugs that are keeping him alive.

"I don't know which ones I can afford every month," Orozco said, explaining how his supply is dwindling and his share of the payments has skyrocketed from $400 to $3,200 per month. He now injects himself with some medications once a day instead of twice - not enough to keep his T-cell count from dropping or to prevent his body from becoming resistant to treatment. And he fears that there will be more cuts.

State budgets have been hit hard by a worsening national economy, including rising costs for energy and health care. In addition, fallout from the subprime mortgage crisis - declining home sales, deflated property values and mounting foreclosures - has caused a slide in states' anticipated tax receipts. Revenue from property taxes, sales taxes and real estate transfer taxes is affected.

At least half of the nation's states are facing budget shortfalls, some of them severe, and policymakers in most of the states affected are proposing and passing often-painful measures to trim costs and close the gaps. Spending on schools is being slashed, after-school programs are being curtailed and teachers are being notified of potential layoffs. Health-care assistance is being cut for the elderly, the disabled and the poor. Some government offices, such as motor vehicle department locations, will start closing on weekends, and some state workers are receiving pink slips.

Some analysts worry that the impact is being felt disproportionately by the most needy.

"It's disappointing, the extent they tend to focus their cuts on the most vulnerable," said Iris J. Lav, deputy director of the Washington-based Center on Budget and Policy Priorities, a liberal think tank that monitors state budget issues. "It does appear to disproportionately affect low-income people."

Unlike the federal government, which can run deficits, almost all states are required by their own laws and constitutions to balance their budgets. Many states are just now hammering out their budgets, so some targeted programs could still be saved in last-minute negotiations.

In most states, talk of raising taxes has become politically perilous, particularly with residents already hurting from falling housing values and a worsening economy.

Only half a dozen states have approved, or are considering, tax increases, including Maryland and Michigan, both of which raised taxes in 2007. In New Jersey, which has a $3 billion deficit, Gov. Jon S. Corzine (D) has proposed eliminating or reducing most property tax rebates. In New York, facing a $5 billion shortfall, an idea in the General Assembly for a new income tax for people making more than $1 million per year died last week after the Republican-controlled Senate, and Gov. David A. Paterson (D), strongly opposed it.

Instead of raising taxes, most states with shortfalls are curtailing services, and the effects are already being felt nationwide. Some of the most dramatic cuts are being made in California, Maine and Rhode Island, according to budget experts, with New Jersey not far behind.

California is facing the worst budget crisis, with a $16 billion shortfall, and Gov. Arnold Schwarzenegger (R) has proposed a $4.8 billion cut in education services. About 20,000 teachers, counselors, librarians, nurses and other support staff members have received notice of potential layoffs, according to the state's Education Department.

Los Angeles, which has the state's largest school district and a $6 billion budget, faces a $460 million cut for the next school year - the dollar equivalent of shutting down the entire district for two weeks.

In Thousand Oaks, Calif., the Conejo Valley Unified School District, home to 30 schools and 22,000 students, has already closed two elementary schools for next year. Superintendent Mario Contini said layoffs could be next. "School districts have been making cuts every year, and there isn't much left to cut," he said. "We've already cut the flesh to the bone, and now we're removing the skeletal parts. It's that severe."

Schwarzenegger has also proposed $650 million in cuts to the Healthy Families Program and Medi-Cal, which together provide health-care services to more than 7 million senior citizens, disabled people and children in the state. Adults under the Medi-Cal program would lose their dental benefits, as well as optometry and psychology services.

The California Department of Public Health is also facing an $11 million cut to AIDS services, with the bulk of that - $7 million - coming from a program that helps low-income Californians, such as Orozco, obtain lifesaving antiretroviral medicine.

Orozco had been paying $400 per month for the 15 daily medications he needs. But when his allotment under the program ran out, his share jumped to $3,200, and he could no longer afford five of the drugs.

"We want to continue to live, you know," he said. "We need to continue fighting what this is. I've been dealing with this since 1983. Every day, it's a fight. It's not easy. Either they help us do something to fight this, or we're going to die."

A recent 50-state survey by the Associated Press showed that hundreds of thousands of poor children, the disabled and the elderly stand to have their health coverage eliminated as a result of budget cuts, and more than 10 million people would lose access to dental care, specialists and name-brand prescription drugs.

Budget experts said they see a repeat of the pattern that happened during the recession of 2001: States generally cut health services and medical benefits first, because these costs are often rising more rapidly than others, and the savings tend to be immediate.

Subsidies to higher education are also a favored target for budget cuts - mainly because policymakers often believe that universities can find money from other sources, such as private donations or higher tuition.

Budgets for parks and recreation, and for natural resources and science, also stand to take a hit.

In cash-strapped Michigan, dealing with the struggles of the automobile industry, the Department of Natural Resources is closing 20 campgrounds, including the highly popular and rustic Pinney Bridge State Forest Campground, considered one of the most beautiful in the Lower Peninsula. The department also plans to end its studies of fish populations in the Great Lakes, and 14 conservation officials are being laid off.

Hunters in Michigan will also find their license fees increased.

In Illinois, Gov. Rod Blagojevich (D) has proposed ending a popular controlled pheasant-hunting program at state sites. Outraged hunters have said that among those affected will be the young and the handicapped, who have access to special hunts under the state program.

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