Have you wondered why we don't see more job growth under the economic stimulus program? One reason is that states are using half of $8.8 billion dollars to plug budget deficits. In all, the Department of Education is disbursing $56.6 billion to the states with few requirements as to how the money is spent.

Here's a breakdown of some of the projects being funded:

What could very well be the next shoe to drop in the U.S. recession? State budget deficits.

States could be battling deficits totaling as much as $150 billion in 2009, so says economist David H. Wang.

"As many as 44 or 45 states could be facing deficits in 2009," Wang said. "It's probably one of the least publicized aspects of the cyclical downturn, but one the nation will have to address, nevertheless."

The primary deficit culprits? Decreased revenue from income and sales taxes (fewer people working, decreased consumer spending), and increased social service payments for unemployment compensation, and other social services, such as Medicaid, Wang said.

The National Conference of State Legislatures forecasts that states will have to close deficits totaling as much as $97 billion over the next 18-24 months, or by the end of 2010. Wang called the NCSL's forecast, "very conservative, and somewhat dated, particularly in light of recent, weak economic fundamentals."

The United States is an enormous, diverse nation, and there's perhaps no better evidence of that than the U.S.'s current economic cycle.

The finances of many states have deteriorated to such a degree that they appear to be in recession, even though the nation as a whole may not be, a survey of 50 state fiscal directors concluded.

The states: budget deficits abound

The National Conference of State Legislatures' survey says that "arguing whether the national economy is in recession is almost beside the point" because the fiscal condition of some states has declined so much that they appear to be in a recession.

In all, 23 states, including hard-hit housing slump states Florida, California, and Nevada, expect to report budget deficits in the next fiscal year, fiscal 2009, with the aggregate revenue shortfall reaching $26 billion. Further, more than two-thirds of the states said they are concerned or pessimistic regarding their F2009 revenue outlook.

Historically, most states experience a decline in revenue as the U.S. economy contracts, as the economic slowdown results in lower retail sales, which lowers sales tax revenue -- a major source of revenue for many states. Job layoffs also decrease state income tax revenue. Further, state social service costs typically increase, as unemployment claims increase and applications for income/food/energy assistance rise.

Florida, California hard hit

Economist Peter Dawson told BloggingStocks Friday the NCSL data is in-line with the profile of this cycle's economic slowdown. "From the research we can see that the states under most stress are those that rank very high regarding mortgage default and housing foreclosure lists, with Florida and California being the most obvious examples," Dawson said. "These states are going to be under fiscal stress for a considerable period of time due to the size of their housing correction."

Moreover, Dawson said because of California's and Florida's size, "it will be very hard for the nation to grow at capacity until these states have started to grow." Hence, a return to robust economic conditions nationally, "could be a year to 18 months off, assuming growth resumes nationally by late 2008," he said.

I'm not quite sure what to make of Google (NASDAQ: GOOG) these days. After making headlines with its acquisition of DoubleClick and the surrounding antitrust and privacy concerns, Google is back in the press in a favorable light, this time by providing free software and consulting services to help state government make public records more accessible to their citizens.

Even this move is raising privacy concerns, but I think they're overblown. Critics say that the plan will give people greater access to personal information. But here's the thing -- It's already part of the public record. Google is just making it easier for people to access information.

It's easy to question Google's motives here -- Is this just a marketing ploy to gain favorable press? I don't think so. I believe that Google's founders have a legitimate commitment to making information more widely available.