Bad Budget Rumbles

There were more signals in recent days that the budget situation is deteriorating at almost every level of government in the United States, a serious sign that very difficult decisions are ahead for elected officials of all stripes.

At the state level, the budget shortfall in 2010 is estimated at $180 billion - and it is probably only going to get worse because of the muted economic recovery nationwide.

For example, revenues in Oklahoma were down 29.1% in December from a year earlier, and net income tax collections in the Sooner State are off by 44%.

It is hard to get your mind around numbers like that.  But it is being repeated in other states.

The revenue shortfall in Florida is estimated to be $2.7 billion.

Sales tax collections in Texas are already $1 billion below estimates, just four months into the latest two year budget adopted in the Lone Star State.

California faces a $20 billion budget shortfall.  On Wednesday, the state's debt rating was lowered one notch, while revenue bonds went down three notches, further ratcheting up pressure on Gov. Schwarzenegger and the State Assembly to cut that deficit.

And the story is the same in local governments, except with smaller figures.

At the federal level, the Treasury Department reported yesterday that there was $92 billion in red ink for the month of December, a record amount.

For the first three months of the fiscal year, the feds are $388 billion in the hole, which is almost 17% more than last year's deficit.

For the year, that set a record of $1.42 trillion.  Are we heading higher this fiscal year?  "All Signs Point To Yes," says the Magic-8 Ball.

What does it mean?  At the state and local level, there will have to be major budget cuts all across the country.  It will hit programs large and small.  It may mean higher taxes in many states and cities.

And it could get ugly in terms of the political backlash this election year.  We'll get an idea of that next week in Massachusetts, maybe.