Many states revise their financial forecasts -- downward
Boston — Some of the nation's 17 new governors, especially those who made strong ''no-new-taxes'' commitments in their campaigns, may come to regret their promises.
With few exceptions, the states they head or are about to take over are in more desperate financial straits than was apparent only a few weeks ago.
While some of the new and returning governors can be expected to resist the increase of existing levies or the imposition of new ones, officials in most states anticipate a wave of at least modest tax boosts in the coming months.
Since the Nov. 2 election, six states - Indiana, Minnesota, Mississippi, Nebraska, New Jersey, and Wisconsin - have enacted major revenue-producing measures to help make ends meet.
In a late November survey by the National Governors' Association (NGA), 41 states responding had projected fiscal 1983 budget deficits totaling nearly $2 billion.
Since the 41 state constitutions - with the exception of Vermont - require that appropriations not exceed income, states that face threatened deficits have little choice but to boost taxes or cut spending.
Fiscal 1983 budgets in at least 26 states have been reduced one or more times since first approved, according to a Monitor survey.
Further cuts are either in the works or being weighed by several dozen governors, most of whom must present their spending proposals for fiscal 1984 within the next few weeks.
In New York, where the next fiscal year commences April 1 - three months before most other states - newly installed Democratic Gov. Mario Cuomo faces a projected $579 million deficit in the current fiscal year and a $1.8 billion revenue gap the next if current spending levels are maintained.
Governor Cuomo is not ruling out the possibility of raising taxes, but he has instructed his fiscal policymakers first to see how much could be saved by reducing appropriations.
Meanwhile, in Wisconsin, newly inaugurated Democratic Gov. Anthony S. Earl and the Legislature, faced with a financial crisis of considerable proportions, enacted a relief package which made permanent a temporary boost in the sales tax from 4 percent to 5 percent, and which raised the cigarette tax from 20 cents a pack to 25 cents. The measure, aimed at averting or at least substantially reducing a projected $377 million deficit in fiscal 1983, also provides for a deferral in scheduled property-tax credit.
Among the other new governors, Republicans George Deukmejian of California and John Sununu of New Hampshire face what could be particularly stiff budget-balancing challenges not only for next year but for the remaining months in fiscal 1983. Yet both have renewed their ''no-new-tax'' pledge.
Governor Deukmejian, in his Jan. 10 budget message, suggested coming to grips with the deficit, now running about $4 million a day and which could reach $1.6 billion by June 30, through various measures including state worker layoffs. His proposal would narrow the fiscal 1983 funding gap by $750 million this year and a similar amount next year.
Although unwilling to speculate what might be recommended, Governor Sununu makes it clear that spending cuts, not tax increases, will be his strategy for eliminating a threatened $32 million deficit in the Granite State budget for the two-year cycle ending next June 30.
A 4 percent across-the-board cut in state spending was ordered in late December when state Senate President Vesta Ray was acting governor following the passing of former Democratic Gov. Hugh J. Gallen.
Also scrambling to keep the wolf from the fiscal door is Michigan's new Democratic Gov. James Blanchard, whose recession-clobbered state may be heading for a $1.13 billion revenue shortfall in the budget year ending next September. Four months ago a deficit of only $400 million was projected.
A Blanchard-appointed Financial Crisis Commission, in its interim report Jan. 8, warned that the revenue gap now stands at $750 million. In response the Michigan governor ordered a state employee hiring freeze and a cap on the payroll.
He also ordered a deferral in state payments to educational institutions amounting to $500 million.
Minnesota, where a temporary increase in the personal income tax from 7 percent to 19 percent and a boost in the sales tax from 5 percent to 6 percent were approved in December, is now expected to barely make it through June 30, instead of ending fiscal 1983 with a $40 million surplus. Aides of new Democratic Gov. Rudy Perpich now project a possible $700 million to $800 million deficit in fiscal 1984-1985.
Other states where new or incoming governors could have a tough time heading off at least modest tax increases or spending curbs in the remainder of fiscal 1983 or fiscal 1984 include Alabama, Arkansas, Georgia, Iowa, Nebraska, Nevada, New Mexico, and Ohio.
New Ohio Democratic Gov. Richard F. Celeste is pondering ways to head off an expected deficit of nearly $500 million in fiscal 1983. ''One possibility'' is to make permanent a supposedly temporary personal income tax surcharge, says a gubernatorial aide.
Even in relatively affluent Texas, new Democratic Gov. Mark White faces slimmer coffers. Revised revenue estimates for fiscal 1983 are down $470 million , and those for the next two years down about $1.1 billion from earlier projections, according to state Comptroller James Bullock. A $1 billion treasury surplus now is forecast for the year ending next Aug. 31.
The NGA study found that the 41 states responding anticipated fiscal 1983 revenues totaling $140.7 billion and spending amounting to $141.2 billion, for a combined deficit of $1.96 billion. By contrast these same states had an aggregate treasury surplus of $2.35 billion in the year ending last June 30.