The budgets proposed for fiscal year 2004 by governors in many states will contain tax increases as a result of deficits that are the largest in 50 years, according to a series of reports on fiscal crises in the states by the Center on Budget and Policy Priorities (CBPP). Tax cuts enacted by states between 1994 and 2001 are a major factor in the current crises, notes a report in the series.

Despite the magnitude of the governors' proposed tax increases, revenues will fall far short of closing budget gaps. States are faced not only with the task of making up for new deficits for 2004 but also with closing emerging gaps for the 2003 budget year, notes one report. "The true severity of the present budget crisis may best be understood by the extent to which it is forcing elected officials with reputations for cutting taxes—both Republicans and Democrats—to propose tax increases."

Eleven tax proposals in the budget President Bush sent to Congress in early February would affect state revenues and result in states' losing up to $64 billion over the next ten years, according to another report by the center, a nonpartisan research organization that studies a range of government policies and programs.

The loss in state revenues will force deep cuts in programs for low-income working families, especially in health care coverage. CBPP researchers studied 11 states in which specific health care cutbacks had already been approved or proposed and found that one million people covered by Medicaid and the State Children's Health Insurance Program will lose insurance coverage if all cuts are instituted. Because the study was conducted before most governors released their budgets and before the President's tax proposals were unveiled, the one-million figure is expected to climb much higher.

"Cuts of unprecedented depth in vital basic services…lie ahead," said Robert Greenstein, the center's executive director, in a press release accompanying a recent report. "Only the provision of substantial fiscal relief to states by the federal government, a step that would also be more effective in stimulating the economy than most tax cuts under consideration, can forestall such an outcome," he added.

An analysis of fiscal problems in 42 states revealed budget deficits of $60 billion to $85 billion for fiscal year 2004, representing 13 percent to 18 percent expenditures in those states. The deficits are at least twice as large as those faced by states during the recession of the early 1990s. Using figures from the National Conference of State Legislatures, the analysis found that these deficits are in addition to both $50 billion in deficits that the states closed when enacting their 2003 budgets and deficits of at least $17.5 billion in 2003 that have opened up in the months since the 2003 budgets were enacted. In compiling their 2004 budgets, "The choices states face will be stark," notes a recent report.

CBPP's 11-state study provides examples of choices already made by some states. Changes being implemented in Tennessee's Medicaid program, TennCare, will eliminate health care coverage for between 160,000 and 250,000 adults and children. Cuts approved in Oklahoma programs, which include the near-elimination of the State Children's Health Insurance Program (SCHIP), will mean loss of coverage for about 80,000 children, adults, seniors, and people with disabilities. Choices involving Nebraska's Medicaid program are expected to result in the loss of coverage for an estimated 26,000 children and adults, including many parents who have recently left welfare for low-paid jobs that offer no health insurance. In April about 50,000 unemployed low-income adults in Massachusetts will lose coverage. Cuts in New Jersey will result in the gradual elimination of most low-income working parents from NJ Family Care, the state's joint Medicaid and SCHIP program. New Jersey has reduced the income limit for parents not already enrolled from 200 percent of the poverty line to 50 percent of the poverty line—from about $30,040 to $7,660 for a family of three.

The reports, which are based on surveys of budget watchdog groups, interviews with state officials, official pronouncements, and press reports, are available on the CBPP Web site at www.cbpp.org.

Eighth, tenth, and 12th graders appear to be reducing their use of many illicit drugs as well as alcohol and tobacco, according to the latest Monitoring the Future Study. The declining use is particularly encouraging for the "club drug" Ecstasy, according to officials at the National Institute of Drug Abuse (NIDA), which funds the annual survey. Use of Ecstasy had been rising steadily since 1998 and appears to have reached a peak in 2001, when 9.2 percent of high school seniors reported using the drug in the past year. In 2002 the rate fell to 7.4 percent of seniors. The 2002 rate of use was 2.9 percent among eighth graders, down from 3.5 percent in 2001. It was 4.9 percent among tenth graders, representing a significant decline from the 2001 rate of 6.2 percent.

Increases in the perceived risk of using a drug are important leading indicators of downturns in the drug's use, according to researchers at the University of Michigan's Institute for Social Research, who have been conducting the annual study for NIDA since 1975. The proportion of 12th graders who reported that they believed that Ecstasy use presented a "great risk of harm" increased from 38 percent in 2000 to 52 percent in 2002—an "unusually rapid" change, according to the researchers—who attributed it to media coverage of adverse events and NIDA's public education efforts about the hazards of Ecstasy use, especially possible brain injury. The student respondents also reported that the availability of Ecstasy has leveled off after steep increases in availability for several years.

Use of any illicit drug in the past year fell significantly among two grade levels—from 19.5 to 17.7 percent among eighth graders and from 37.3 to 34.8 percent among 10th graders. The reduction among tenth graders was the first significant decline since 1998. Among seniors in high school, use of any illicit drug fell only slightly, from 41.4 percent to 41 percent.

Use of marijuana, which accounts for about half of illicit drug use among the three grade levels, declined significantly among tenth graders, 30.3 percent of whom reported past-year use, compared with 32.7 in 2001. Rates of use declined only slightly for eighth and 12th graders; 2002 rates were 14.6 and 36.2, respectively.

Statistically significant declines in alcohol use were noted among eighth and tenth graders—for both past-year and past-month use. A total of 41.9 percent of eighth graders reported past-year drinking in 2001, compared with 38.7 percent in 2002. Past-month drinking among eighth graders fell from 21.5 to 19.6 percent. Reports by tenth graders of past-year alcohol use were 63.5 percent in 2001 and 60 percent in 2002; rates of past-month use fell from 39 to 35.4 percent. Drinking rates fell among seniors, but not significantly: from 73.3 to 71.5 for past-year use and from 49.8 to 48.6 for use in the past 30 days. The proportions of students in grades 8, 10, and 12 who said that they were drunk in the past 30 days were 7 percent, 18 percent, and 30 percent, respectively, in 2002—declines of between 1 and 4 percentage points from 2001 and a highly significant decline for 10th graders.

The findings for tobacco use were so dramatic that the researchers issued a special press release on teen smoking. Between 2001 and 2002 the proportion of teens reporting lifetime cigarette use fell by 4 or 5 percentage points in each grade. Rates of past-month use in 2002 were 10.7 percent for eighth graders, 17.7 percent for tenth graders, and 26.7 percent for 12th graders. The corresponding rates for 2001 were 12.2, 21.3, and 29.5. The declines were significant for all grade levels. Smoking has been declining steadily among the three grade levels since 1996, when the rates were 21 percent for eighth graders, 30.4 percent for tenth graders, and 34 percent for 12th graders.

The Monitoring the Future Study is often described as the most reliable source of information on adolescent substance abuse. In 2002, about 44,000 students from 400 public and private schools nationwide were surveyed. The students completed self-administered, machine-readable questionnaires, which were distributed and collected by University of Michigan research personnel. The results are available at www.monitoringthefuture.org.