State Budgets to Remain Low Through 2012, Report Says

States faced with big budget deficits will continue to grapple with diminished revenue until at least 2012, according to a new survey, Bloomberg reported.

The $135 billion of funding under President Obama’s economic stimulus package has prevented more drastic budget cuts from states, said the report by the National Governors Associations and the National Association of State Budget Officers.

Nine other U.S. states face similar fiscal strains brought on by the global recession as those that left California on the brink of insolvency four months ago, according to a report by the Pew Center for the States, Bloomberg said.

State revenues fell 7.5% in fiscal 2009, forcing states to close budget gaps of $72.7 billion and some will struggle through most of the next decade because the length of the recession leave them with a host of unmet needs, the report said, Bloomberg reported.

Virginia and other states have closed or considered closing rest stops as a result of the budget crunch. (Click here for previous coverage.)

When economic recovery begins, officials will have to pay into employee pension and health-care funds and for maintenance, technology and infrastructure investments postponed during the economic downturn, Raymond Scheppach, executive director of the National Governors Association, said in a statement.