Budget Deficit, States | featured news

State governments across the country are laying off teachers, closing public libraries and parks, and reducing health care services, but there is one place they could get $23 billion if they could only agree how to do it: Internet retailers such as Amazon.com.

Tax income has been outpacing forecasts — good news as Sacramento struggles with a $15-billion budget deficit. GOP leaders are already using it as fodder against Gov. Brown's proposed tax increases.

Spurred by budget crises, California and Michigan together reduced their prison populations by more than 7,500 last year, contributing to what a new report says is the first nationwide decline in the number of state inmates since 1972.

On the recession's front lines, governors are struggling to chart the road ahead for states staggered by unrelenting joblessness and cut-to-the-bone budgets even as Washington reports signs of economic growth.

"The worst probably is yet to come," warned Gov. Jim Douglas, R-Vt., chairman of the National Governors Association, at the group's meeting Saturday. He called the situation "fairly poor" in most states, adding that it "doesn't look too good."

At least 15 states are in various stages of considering or implementing furloughs, with mixed results.