Grim Reaper Attacks State Budgets as Deficits Soar

Well, the economic news just keeps getting worse. Not only is the country facing a $1 trillion budget deficit, but states and cities across the country are racking up record-breaking deficits that are predicted to last for years.

So far, New York, California, and Arizona, and the cities of Detroit and Philadelphia are calculating growing budget deficits.

New York predicts a budget deficit of $1.5 billion for the current fiscal year ending March 2009, but it doesn’t stop there. The projected budget deficit for next year will hit $12.5 billion — more than double the $5.4 billon initially projected in August — then $15.8 billion the following year and $17.2 billion in 2012 adding up to a record-breaking $47 billion cumulative gap heading into the fiscal 2013 year.

A special legislative session is scheduled for November 18 to approve additional spending cuts.

The Schwarzenegger administration three weeks ago estimated the state’s revenue could fall short of projections by $3 billion. But Tuesday, the administration said California could start in a budget hole of $10 billion for the fiscal year beginning June 30, 2009.

California Senate Democratic leader Don Peralta said the $10 billion gap between revenue and expenses added to the $17 billion deficit for this current fiscal year.

Arizona’s budget deficit is projected at $1.5 billion, among the nation’s worst as a percentage of total budget.

Monday, Philadelphia’s projected budget deficit for the next five years started at $450 million, soared to $850 million, and is still growing. Philadelphia Mayor Michael Nutter told the Philadelphia Business Journal that the city was hit hard by a decrease in tax revenue and the value of investments it uses to pay pensions. The city also has to bridge a $100 million deficit for the final six months of the current fiscal year.

Detroit’s deficit is also growing, currently residing between $123 million and $126 million.