Times are especially tough in states hit hard by the mortgage crisis, The New York Times reported.
California has a $17 billion budget gap. Nevada, which cut $914 million from its previous budget, has a $275 million shortfall and a Republican governor, Jim Gibbons, calling for a 4-percent budget cut by state agencies. And Arizona has a $2.2 billion budget gap on a spending plan of $9.9 billion, the Times reported.
After adjusting for inflation and tax cuts, state tax revenues fell 5.3 percent in the first quarter of 2008 with flat sales tax revenues and a 5.1-percent decline in corporate taxes compared to 2007, the Times reported.
Twelve states have also experienced a drop in taxable incomes, the newspaper said.
"There are signs that the economic weakness is very widespread," Don Boyd, a senior fellow at the Rockefeller Institute of Government in Albany, N.Y. told the Times. "Between this past May and three months prior, a lot more states were declining," he said.