Legislators in U.S. states who are returning to work this month or entering office for the first time expect to spend much of the new year pinching pennies.
According to a survey released Monday by the National Conference of State Legislatures, most state lawmakers listed balancing the budget at the top of their fiscal agenda.
"Diminishing federal stimulus funds, slow revenue growth and spending pressures have opened new budget gaps totaling $26.7 billion this fiscal year," the survey found. It added that states already expect a total gap of $82.1 billion for fiscal 2012, which begins for most in July.
All states except Vermont must balance their budgets. Accomplishing that has become a growing challenge after years of cutting that has left few areas to provide new savings and as aid from the federal economic stimulus plan trickles off.
At the end of 2010, revenue gradually began increasing and unemployment rates dropping in many states. But the improvements are not likely large enough to undo a crisis caused by nearly three years of low income and high demand on social services.
The conference, made up of members of states' legislatures, asked fiscal directors to identify the top three fiscal issues for 2011.
Nearly two-thirds -- 31 states -- identified budgets as a top fiscal priority. Eighteen states cited healthcare and Medicaid, the assistance program partially reimbursed by the U.S. government, as major concerns, and education dominated in 13.
For Illinois, which is looking into having outside sources pay some of its overdue bills to help end a deficit bigger than $13 billion, the top issues were "budget, budget, budget."
For nearby Minnesota, the budget problem "is so large that it is hard to imagine other distinctive fiscal issues," according to the survey.
Minnesota faces a nearly $6.2 billion projected shortfall heading into its fiscal 2012-13 biennium, and the new governor, Mark Dayton, said in his inaugural address Monday that any solution will have to include raising taxes.
"To those who sincerely believe the state budget can be balanced with no tax increase - including no forced property tax increase - I say, if you can do so without destroying our schools, hospitals, and public safety, please send me your bill, so I can sign it immediately," he said.
California, which faces a budget gap that may reach $28 billion over the next 18 months, listed only one fiscal issue in the survey, also the budget.
The New York state comptroller said last month the Empire State's tax collections must rise 8 percent to meet forecast spending. New York fiscal officials listed tax revenue as the third top issue in the NCSL survey, after closing budget gaps and dealing with the end of $5.4 billion in stimulus funds.
The New York Times has reported the state's new governor, Andrew Cuomo, will soon propose freezing salaries.
As 2010 wound down, Pennsylvania's fiscal situation improved, and outgoing Governor Ed Rendell said Monday the state collected $176.9 million in tax revenue in December, enough to end the fiscal year with a modest surplus. Still, Rendell expects Pennsylvania to have to close a gap of at least $3.5 billion next fiscal year.
Pennsylvania was one of eight states in the survey that said pensions were a leading fiscal issue, citing a looming crisis where costs will rise by $1.7 billion.
Also Monday, Massachusetts Governor Deval Patrick said he will cut legislators' salaries. In the survey, Massachusetts officials said rising healthcare costs make up the state's most pressing fiscal issue, followed by substantial cuts to the aid the state sends local governments and market losses its pension fund has suffered. (Additional reporting by Karen Pierog in Chicago, Joan Gralla and Edith Honan in New York and Jon Hurdle in Philadelphia; Editing by Dan Grebler)