Budget crisis afflicts states across U.S.

Four states rushed to close billions of dollars in budget shortfalls and approved spending plans, but legislatures and governors in six states were still far apart on their budgets as the fiscal year began Wednesday.

Indiana, Mississippi and Delaware averted disruptions in services by approving budgets in time for the new fiscal year. It was not clear whether Arizona would escape a shutdown, even though its Legislature sent Republican Gov. Jan Brewer a final-hour $8.4 billion budget plan. The budget did not contain a temporary sales-tax proposal the governor had sought to put on the November ballot. If she vetoes the budget, the government could stop operating.

Brewer has 10 days to sign or veto the budget or allow it to become law without her signature.

States without budgets on the first day of the new fiscal year are Connecticut, Illinois, Pennsylvania, North Carolina and Ohio. California lawmakers approved a budget in February but falling revenue has knocked it out of balance by $24 billion.

California officials said they will be forced to issue IOUs because they will not have the money to pay all of the state's bills. Pennsylvania and Illinois officials say they will keep essential operations going, but a protracted stalemate could begin affecting day-to-day services in those states in a few weeks.

Ohio lawmakers approved the first temporary budget in 18 years on Tuesday, keeping spending going for at least a week as they try to reach a compromise. Connecticut Gov. M. Jodi Rell, a Republican, signed an executive order to keep government running without an approved budget. North Carolina lawmakers approved a stopgap plan while they continue budget negotiations.

Indiana had been preparing for a partial shutdown if a budget plan had not been in place by July 1, but lawmakers sent a $27.8 billion spending plan to Gov. Mitch Daniels, a Republican, who signed it late Tuesday. Indiana had not missed a budget deadline since 1887.

At 4:33 a.m. local time Wednesday, Delaware Gov. Jack Markell, a Democrat, signed the $3 billion budget the Legislature sent him, wiping out an $800 million shortfall. In Mississippi, lawmakers ended a stalemate with Republican Gov. Haley Barbour over a Medicaid reauthorization plan, and Barbour is expected to sign that and other spending bills that will keep government running.

The last time so many states blew the deadline was two years ago, when six states could not agree on a budget by July 1. The widening of the problem this year reflects a steady drop in tax revenue because of the recession, which has forced 48 states nationwide to close $166 billion of budget gaps.

Even a partial shutdown of services could have an acute impact on residents and state workers. Thousands of state employees could be furloughed. Road repairs would cease. Drivers couldn't get or renew licenses. State parks would be shuttered.

If forced to shut down services, Arizona won't investigate reports of child abuse or help domestic-violence victims, among other things. Pennsylvania employees would stop getting paychecks beginning July 17.

California Controller John Chiang said he would begin issuing IOUs today if the Legislature and Gov. Arnold Schwarzenegger, a Republican, cannot agree on a budget. Payment delays would affect income and corporate tax refunds; payments to private contractors, state vendors and local governments for social services; and state operations, including daily pay for legislators.

Hardly a week goes by without another state budget problem surfacing. On Tuesday, Kansas Gov. Mark Parkinson, a Democrat, said that since the Legislature approved a pared-down state budget earlier this year, tax revenue has fallen so sharply in May and June that another $135 million in cuts will be needed as the fiscal year begins.

Without the federal economic stimulus package, state budgets would be even more out of whack. Stimulus money has closed about 40 percent of state budget shortfalls, according to the Center on Budget and Policy Priorities.