Physician's Money Digest, January15 2003, Volume 10, Issue 1

Back in the late 1990s, state governmentpiggy banks were brim-full,prompting many states to cut taxesand bump spending to a rate of 6.4%a year from 1995 to 2001. Last year,however, states were looking atdeficits totaling $50 billion, and lessthan halfway into fiscal 2003, whichbegan in July for most states, the totaldeficit is already up to $17 billion.Since 49 of 50 states have a balanced-budget requirement, an immediatefix is necessary, and it figuresto be painful. Physicians and theirfamilies should plan for tough times.Already on the table in manystates are cutbacks in Medicaid andlower subsidies for education, alongwith higher sales and income taxes.Abigger state tax bite, say some economists,is likely to wipe out at leastpart of any break taxpayers get ontheir federal taxes.