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But tax revenue is not expected to grow enough to make up for the impact of four years of dismal economic times. Rainy-day funds, internal transfers and other one-time sources have largely been tapped, so governors and lawmakers must look for new places to cut spending. "They've done the easy cuts and only a few have budget reserves left," said Elizabeth McNichol of the Center on Budget and Policy Priorities, a Washington, D.C.-based think tank. "There aren't really things that are sacrosanct any longer." Changes to public employee retirement benefits and sweeping reforms to health care programs such as Medicaid are among the most likely targets. At least 17 states project budget gaps for the next fiscal year, while a handful need to balance budgets in the remaining six months of the current budget year. The revenue of all 50 states combined remains $21 billion below 2008 levels, according to the National Governors Association-NASBO report. Budget gaps in states projecting shortfalls in the 2012-13 fiscal year are estimated to total $40 billion. By comparison, California alone closed a deficit of $42 billion in 2009, during the worst of recession. The nation's most populous state is again facing budget troubles, but the problem appears more manageable than during the past few years. Even so, Democratic Gov. Jerry Brown and state lawmakers have fewer options to close the $13 billion shortfall that is projected over the next 18 months. In December, Brown ordered $1 billion in midyear spending reductions to public schools, universities and social services because tax revenue did not meet projections. The state has given school districts the option of slicing another seven days from the current school year, now 175 days long. That already is five days shorter than before the recession. Low-income seniors and the disabled will get less in-home care when the reductions start in January. School advocates warn that an estimated 1 million students will have trouble getting to class with a drop in home-to-school transportation funding. "The cut to transportation is absolutely devastating," said Steve Henderson, a lobbyist for the California School Employees Association. "What that means is a lot of low-income and rural kids will not have the ability to get to school." Brown has proposed a 2012 ballot initiative to raise $7 billion annually through 2016 by boosting income taxes on individuals making $250,000 or more a year and increasing the state sales tax by a half-cent. He also has submitted a plan to the Legislature to revamp public employee pensions. Washington state is considering similar cuts to cope with its shortfall, including shortening its school year, eliminating medical programs for 55,000 low-income residents and letting some low- and moderate-risk offenders out of prison early. Missouri is reducing funding for elementary and secondary education to close a mid-year budget deficit tied to tornado recovery. North Carolina Gov. Beverly Perdue, a Democrat, is warning of thousands of teacher layoffs next fall because federal aid to local school districts is running out. In Colorado, Gov. John Hickenlooper has proposed deep cuts to K-12 funding and higher education, largely because of a spike in Medicaid enrollment. "This doesn't make us happy," said Hickenlooper, a Democrat. "I don't see a way to get around it."
[Associated
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