State revenues

State governments expect tax revenues to grow this fiscal year, but they still foresee trouble ahead, partly through their own misjudgments.

Budget cuts and tax increases have combined to close deficits in almost all of the 41 states that had budget gaps going into the 2011 fiscal year, according to the National Conference of State Legislatures.

The states expect tax revenues to rise this year. However, they are also facing the end of federal stimulus funds, and higher tax revenues are not keeping pace with drops in sales and income taxes.

It will get worse for some states. About half of them, New York included, wrongly assumed stimulus aid for Medicaid would be forthcoming. They went ahead and included it in this year's budgets. However, the money has not been allocated by Washington, while Congress continues to debate the proposal.

Difficult as the 2011 fiscal year has been, it could be better than what lies ahead. According to the conference, this year "may turn out to be the calm before the fiscal tempest."