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State budgets feel effects of economy

Governors are telling departments to trim budgets and jobs.

SACRAMENTO, Calif. (AP) — The nation’s economic meltdown is taking state budgets down with it — especially in California, where Gov. Arnold Schwarzenegger said Thursday he wants to close a $11.2 billion gap in part by raising sales taxes on everything from cars to Disneyland tickets.

Several other states are confronting billion-dollar deficits. Some, including Massachusetts, North Carolina and Wisconsin, have ordered broad and deep cuts in spending, while others have only begun to consider how to compensate for their revenue wells’ drying up.

Schwarzenegger wants $4.5 billion in cuts; one of his proposals would force state employees to take a day off each month without pay and give up two holidays. But he says cuts alone aren’t enough to deal with a steep drop in revenue, and he proposes $4.7 billion in tax hikes, including a three-year, 1.5-percentage-point increase in the sales tax.

“We have a dramatic situation here and it takes dramatic solutions ... and immediate action,” Schwarzenegger said as he called the Legislature back into session to deal with the shortfall. “We must stop the bleeding.”

The shortfall in Arizona is even worse, on a percentage basis, than California’s. Gov. Janet Napolitano on Thursday said the state’s deficit had grown to an estimated $1.2 billion, or 12 percent of general fund spending, forcing lawmakers into a likely special session by the end of the year.

The deficit in Washington state is projected at $3.2 billion but could grow by the time officials get an update later this month.

Nevada Gov. Jim Gibbons and the Legislature have cut spending by $1.2 billion because of declining tax revenue, but Gibbons warned lawmakers they might have to cut another 14 percent when they go into session in February.

Wisconsin’s governor has ordered state agencies to trim 10 percent to cover a $3 billion hole over two years, while North Carolina’s governor has ordered several departments to make do with 5 percent less. Massachusetts Gov. Deval Patrick announced last month that the state would eliminate up to 1,000 jobs and make more than $1 billion in cuts and spending controls to bridge a growing budget gap.

New York Gov. David Paterson last week asked Congress for as much as $8.6 billion from an economic stimulus measure Democrats are considering. He already has called a special session for later this month to tackle a $1.5 billion deficit for the fiscal year that ends in April and warned that New York’s deficit could hit $47 billion by 2012.