Still, things could be worse. And they will be: The anticipated 50-state budget gap for fiscal 2010, which begins July 1, is estimated conservatively at $65 billion. Thus, the combined fiscal 2009-2010 budget gap is $97 billion, and that's only if the recession doesn't get worse.
This explains why 48 governors and governors-elect gathered in Philadelphia last week to appeal for federal help from President-elect Barack Obama. States have to balance their budgets; the federal government doesn't.
Recession hits state governments two ways: It reduces tax revenues (less individual and corporate income on which to pay taxes, fewer sales to generate sales taxes), and it increases the need for services, particularly unemployment assistance, Medicaid and food stamps.
Pennsylvania Gov. Ed Rendell, chairman of the National Governors Association, said no specific figures were mentioned in the meeting with Mr. Obama. But the governors are known to be seeking $40 billion over the next 18 months to bolster Medicaid (the federal-state program that provides health care for the poor and disabled) as well as $136 billion in public works projects.
Public works spending not only would put people back to work but also would meet a genuine need. The backlog of unfunded highway, bridge, sewer and flood-control projects is long and getting longer.
In Missouri, Mr. Nixon wisely appointed former state Sen. Wayne Goode of Pasadena Hills in north St. Louis County as his transition team's budget expert. Mr. Goode, who left the Legislature after 2004 after hitting the statutory term limit (indeed, he is a prime example of why term limits are a bad idea), spent 42 years in the House and Senate. His budget expertise was respected on both sides of the political aisle.
Mr. Goode, assisted by outgoing state Rep. Margaret Donnelly, D-Richmond Heights, quickly cut through the fog coming from Gov. Matt Blunt's office about having left a $281 million "surplus" in the current year budget. "Initial estimates of a general revenue shortfall of $623 million, however, will more than consume the anticipated $281 million surplus, leaving the budget for FY 2009 with a $342 million budget shortfall," Mr. Goode and Ms. Donnelly reported.
Mr. Nixon announced last week that he will require each state agency to submit an "action plan" for reducing its budget. He will freeze new long-term state contracts for goods and services and order performance reviews of all state agencies, including the performance of state tax credit programs.
Which is all well and good, but since nearly all of the state's general revenue is spent in four areas — health care, social services, education and corrections — Mr. Nixon's options are limited. Cuts in most programs are inevitable.
He surely is getting a lot of advice, so here's ours: The last place to cut is the state's Children's Health Insurance Program.
The number of uninsured Missouri children jumped by 44 percent between 2005 and 2007, the latest year for which detailed numbers are available. With the worsening economy, that number almost certainly has grown.
Health insurance for children is among the best investments a state can make in its future. Insured kids tend to be healthier than uninsured kids, maybe because they get medical treatment for illnesses sooner than uninsured children. Sick kids can't attend school and learn. Kids with poor education eventually become adults who don't compete well for good jobs or have trouble supporting themselves.
Cutting kids' health insurance is like eating the seed corn for dinner. It helps a little now but makes tomorrow's problem that much worse. This is where states can get the most bang for their diminishing bucks.