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American Morning
Financially Strapped States, Cities Plunging into Big Budget Battles
Aired July 02, 2003 - 07:34 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
MILES O'BRIEN, CNN CORRESPONDENT: While the federal government will be busy this summer giving money away, financially strapped states and cities are plunging into big budget battles over spending cuts and revenue shortfalls.
Bruce Morton reports on one such battle.
(BEGIN VIDEOTAPE)
BRUCE MORTON, CNN CORRESPONDENT (voice-over): Schools in trouble -- school ended early in Oregon last semester. Legislators have given themselves an extra 30 days to wrestle with the issue in the next budget. In Nevada, Governor Kenny Guinn has asked the state supreme court to step in after he and the legislature couldn't agree. Some districts in Washington State will face cuts. Maryland state universities are charging more.
All part of a much larger problem with even broader consequences. In Massachusetts, the governor signs the budget and vetoes $200 million in spending. In New Jersey, a late breakthrough, a tax on Atlantic City casinos. In California, no breakthrough, a state running entirely on borrowed money, angry legislators.
BRUCE MCPHERSON, (R), CALIFORNIA STATE SENATE: Well, I'm disappointed. This is the most frustrating year of the 10 that I've been in the legislature.
JENNY OROPEZA (D), CALIFORNIA STATE HOUSE: It is really a failure of this legislature to do its duty.
MORTON: Three states have raised income taxes. Five have increased sales taxes. "USA Today" reports 46 states are borrowing record amounts. It's a firestorm of fiscal trouble for states around the country.
What's gone wrong? Less coming in from things like sales taxes, for one thing.
UNIDENTIFIED MALE: So they were rolling in dough when the market was booming and they ran into particular trouble when the market went down. Also, a lot of states -- following in a sense what President Bush had been talking about, made big commitments to funding -- more funding for education. So they were stuck with these serious commitments to a good thing at a time when all the money was dropping out of the bottom of their coffers. MORTON: States, by and large, have to balance their budgets. The federal government doesn't. It can run, is running big deficits. One way to help the states would be to revive a program President Nixon started, revenue sharing -- federal money going directly to the states. The states are getting $20 billion to help pay for Medicaid and other costs, part of that new tax cut. But the White House says balancing budgets is a state job. The president's is improving the overall economy.
So, more of a helping hand from Washington? The states would love it, but there's no sign the Bush administration is inclined to do more.
Bruce Morton, CNN, Washington.
(END VIDEOTAPE)
TO ORDER A VIDEO OF THIS TRANSCRIPT, PLEASE CALL 800-CNN-NEWS OR USE OUR SECURE ONLINE ORDER FORM LOCATED AT www.fdch.com
Budget Battles>
Aired July 2, 2003 - 07:34 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
MILES O'BRIEN, CNN CORRESPONDENT: While the federal government will be busy this summer giving money away, financially strapped states and cities are plunging into big budget battles over spending cuts and revenue shortfalls.
Bruce Morton reports on one such battle.
(BEGIN VIDEOTAPE)
BRUCE MORTON, CNN CORRESPONDENT (voice-over): Schools in trouble -- school ended early in Oregon last semester. Legislators have given themselves an extra 30 days to wrestle with the issue in the next budget. In Nevada, Governor Kenny Guinn has asked the state supreme court to step in after he and the legislature couldn't agree. Some districts in Washington State will face cuts. Maryland state universities are charging more.
All part of a much larger problem with even broader consequences. In Massachusetts, the governor signs the budget and vetoes $200 million in spending. In New Jersey, a late breakthrough, a tax on Atlantic City casinos. In California, no breakthrough, a state running entirely on borrowed money, angry legislators.
BRUCE MCPHERSON, (R), CALIFORNIA STATE SENATE: Well, I'm disappointed. This is the most frustrating year of the 10 that I've been in the legislature.
JENNY OROPEZA (D), CALIFORNIA STATE HOUSE: It is really a failure of this legislature to do its duty.
MORTON: Three states have raised income taxes. Five have increased sales taxes. "USA Today" reports 46 states are borrowing record amounts. It's a firestorm of fiscal trouble for states around the country.
What's gone wrong? Less coming in from things like sales taxes, for one thing.
UNIDENTIFIED MALE: So they were rolling in dough when the market was booming and they ran into particular trouble when the market went down. Also, a lot of states -- following in a sense what President Bush had been talking about, made big commitments to funding -- more funding for education. So they were stuck with these serious commitments to a good thing at a time when all the money was dropping out of the bottom of their coffers. MORTON: States, by and large, have to balance their budgets. The federal government doesn't. It can run, is running big deficits. One way to help the states would be to revive a program President Nixon started, revenue sharing -- federal money going directly to the states. The states are getting $20 billion to help pay for Medicaid and other costs, part of that new tax cut. But the White House says balancing budgets is a state job. The president's is improving the overall economy.
So, more of a helping hand from Washington? The states would love it, but there's no sign the Bush administration is inclined to do more.
Bruce Morton, CNN, Washington.
(END VIDEOTAPE)
TO ORDER A VIDEO OF THIS TRANSCRIPT, PLEASE CALL 800-CNN-NEWS OR USE OUR SECURE ONLINE ORDER FORM LOCATED AT www.fdch.com
Budget Battles>
