In states across the nation, one of the most significant eras of tax-cutting is drawing to a close.

Thanks to a slowing economy, states are having to take extraordinary actions to balance their budgets. In some cases, that means postponing tax cuts - or even pondering politically unpopular tax hikes.

So if you just got a $300 rebate check from Uncle Sam, enjoy it. Such largess from your state treasury looks unlikely.

State lawmakers have already imposed new taxes on items such as cigarettes or rental cars - levies that will bring in needed cash at a low political cost.

In Tennessee and North Carolina, states where budget shortfalls are most serious, lawmakers have considered the more controversial step of raising income taxes - and faced a series of angry revolts by residents.

Such moves, coupled with news this week that the federal budget surplus is fast dwindling, come as an unwelcome surprise to many taxpayers. In fact, both state and federal politicians now face difficult choices.

"It's been 10 years since states have seen real revenue problems," says Kevin Carey, an analyst at the Center on Budget and Policy Priorities. "If the stagnant growth continues for another year or two, then you might see a lot of states in a situation like Tennessee or North Carolina."

Already, budget shortfalls are affecting everything from foster care funding in Missouri to the federal budget surplus - where plunging forecasts have curbed Republican hopes for corporate tax breaks.

"First of all, there won't be any more tax cuts," says John Spratt (D) of South Carolina, the ranking Democrat on the House budget committee. Some planned tax credits may not go through, he adds.

At the state level, after more than half a decade of lowering taxes, the prospect of tax hikes has stirred strong emotions.

In Tennessee, a mob of voters stormed the state Capitol in July, breaking windows, after hearing that the legislature planned to institute an income tax (the state does not currently have one). Lawmakers scrapped the tax, but covered the budget gap only by factoring in four years' worth of tobacco settlement money.

Gov. Don Sundquist (R), whose veto of the plan was overridden, called it "full of reckless disregard for our state's future."

North Carolina lawmakers are a month late passing a budget, after deadlocking over a plan for a $440 million tax increase - or big spending cuts. Hundreds of residents held a "Tarheel Tea Party" in Raleigh to protest the proposed tax hike.

In New Hampshire, residents of two towns have recently circulated a petition threatening to secede over tax issues. The state, with no income or sales tax, has raised property taxes to give court-mandated funding to poorer school districts.

In New York, after months of failing to agree on a budget, Gov. George Pataki (R) has actually sued the legislature in a dispute over constitutional powers.

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