Over at Neighborhood Effects, Eileen Norcross reports on the deteriorating fiscal health of our states:

The National Conference of Legislatures has a new report on the fiscal health of the states. It’s a grim picture. Budget gaps that started appearing in 2008 are likely to continue into 2011. While enacting FY 2009 budgets, 44 states filled a total $40 billion gap. But within a few months, budgetary gaps reopened, this one topping a $62.4 billion.

She concludes:

We’ve heard about “aggressive accounting” – creative, and suspect accounting practices. Now we may be seeing the results of “aggressive budgeting,” – the tendency to expand spending on the assumption that revenues only go up.
The next chapter for the states, an estimated budget gap totaling $121.2 billion in 2010, says Corina Eckl of NCSL, “The fiscal situation facing the states is like a bad horror movie. The details get more gruesome and they never seen to end.

For an interesting chart about state budget gaps, go here.

And of course, when states constantly ask the federal government to bail them out, it has important consequences on federalism.