Governors across the country have already pared payrolls, delayed infrastructure and cut aid to municipal government. In testimony before the House Appropriations Committee, Wisconsin Democrat Jim Doyle, New Jersey Democrat Jon Corzine and Vermont Republican Jim Douglas say they're looking at cratering tax revenues. That means even bigger - and far more painful - cuts are coming.
Doyle told lawmakers that he's facing a $5.4 billion, 17 percent budget gap in his upcoming fiscal plan. That's on top of a 10 percent cut already made to Wisconsin's state work force.
Corzine says governors could use up to $100 billion to help with day-to-day operating costs, in addition to a recent $40 billion request over two years to help fund the Medicaid program for the poor and disabled and up to $136 billion for infrastructure projects like road and bridge repair.
Without help, the governors said, the cuts to state services and infrastructure projects would take money out of the economy, deepening the recession.
"We will be forced to cut the very tools and services that people depend on to pull them out of recession," Doyle said.
To put an exclamation mark on the governors' woes, California officials projected a $41.8 billion deficit through the budget year ending June 30, 2010. For the current fiscal year, the deficit is projected at $15 billion.
The transition team of President-elect Barack Obama and Capitol Hill Democratic leaders are beginning to work out the parameters of an economic recovery bill in the $500 billion range that Obama wants to sign shortly after taking office. House Speaker Nancy Pelosi, D-Calif., has indicated sympathy to the governors' plight.
"Every dollar the government taxes and spends is a dollar a family could invest in their children's education or an employer could have used to create more jobs,' Texas GOP Gov. Rick Perry said in a statement.
Corzine said portions of New Jersey's budget simply can't absorb cuts, like debt payments, child welfare agencies, prisons, public safety and help for the developmentally disabled and mentally ill.
"What's left on the chopping block are fundamental programs like Medicaid, higher education, and aid to municipalities," Corzine said.
House Appropriations Chairman David Obey, D-Wis., warned that even if a big economic stimulus bill becomes law soon, a leading economist told House Democrats recently that the economy is in such bad shape that 9 percent unemployment can't be avoided. The economist was Mark Zandi of Moody's Economy.com.