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To deal with a fiscal crisis in Arizona, the
governor-elect, Janet Napolitano, a Democrat, wants agencies
to cut spending by 10 percent across the board, making
exceptions only for education, corrections and some children's
The University of Iowa increased tuition and fees this year
by 18.5 percent, the biggest increase in more than two
decades, after an increase of 9.9 percent in the prior year.
The state Board of Regents is considering further increases
for the next academic year.
Most of the tax changes made by states in the last year
affected tobacco levies. Nineteen states increased cigarette
taxes, many by more than 50 cents a pack, the governors'
Services account for a growing share of state economic
activity, but states have found it difficult, for political
reasons, to increase taxes on services. Likewise, Mr.
Scheppach said, "it's very hard to raise taxes on
middle-income Americans, when they don't have secure health
insurance, to pay for health care for low-income
State tax collections came in far below the states'
original estimates in the most recent fiscal year, which ended
on June 30 for most states. Sales tax revenues, $147.6
billion, were 3.2 percent lower than expected, while personal
income tax revenues ($187.7 billion) were down 12.8 percent
and corporate income tax receipts ($21.6 billion) were down
In July, the United States Senate overwhelmingly approved a
proposal to provide fiscal relief to states through a
temporary increase in federal grants for Medicaid and social
services, but it never became law. The Bush administration and
Senator Don Nickles, the Oklahoma Republican in line to become
chairman of the Budget Committee in the new Congress, opposed
Federal officials say they have no money to spare at a time
when the federal government faces growing deficits, after four
years of surpluses.
Mr. Scheppach cataloged some of the states' needs. After
the Sept. 11 attacks, President Bush sought $3.5 billion to
train and equip local police officers, firefighters and rescue
workers, but Congress adjourned last week without providing
Mayor Thomas M. Menino of Boston, president of the United
States Conference of Mayors, said cities were spending $2.6
billion on new security measures without receiving any direct
With great fanfare, Congress passed legislation last month
to clean up the nation's election procedures. But it provided
none of the money promised to states to help them buy new
election machinery and to train poll workers to comply with
On Oct. 1, states lost $1.2 billion that had been
appropriated by Congress to provide health coverage for
low-income children. The money, unclaimed after four years,
reverted to the Treasury, and Congress did nothing to restore
it, despite pleas from states.