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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."

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Next recession ripple: State deficits could rise to $150 billion in 2009 originally appeared on BloggingStocks on Tue, 30 Dec 2008 15:45:00 EST. Please see our terms for use of feeds.

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