Fiscal cliff stalemate spurs anxiety in states

Oklahoma Gov. Mary Fallin said the state could lose as many as 8,000 jobs in the aerospace and defense industries, and Minnesota state economist Tom Stinson forecast "ultimate gloom" under a fiscal-cliff induced downturn that he said could cost 115,000 jobs in 2013-2014 and hundreds of millions of dollars of lost state tax revenues.

In California, letters have been sent to 360,000 jobless residents warning that a federally funded extension of their benefits could expire.

Even through the federal spending cuts and tax hikes have yet to kick in, some state officials believe they already are suffering the effects. Massachusetts Gov. Deval Patrick ordered spending cuts this past week to help close a projected $540 million budget hole that he blamed largely on the federal stalemate. Businesses are reluctant to make capital investments without knowing what will happen, he said.

"By all accounts, that uncertainty and the resulting slowdown in economic growth is the direct cause of our budget challenges," Patrick said.

In many states, confusion reigned. Governors often must present a budget to legislators early in 2013. That means their financial experts are working now on estimates of how much tax revenue they'll receive and how much federal funding they can rely upon. The ongoing negotiations in Washington are forcing some to leave question marks in their calculations.

"States have already had to make really tough budget decisions over the last couple of years," said Schroeder, of the Pew Center. "This uncertainty about exactly what their revenue is going to be makes an already difficult process that much more difficult."

Associated Press writers Chuck Bartels in Little Rock, Ark; Thomas Beaumont in Des Moines, Iowa; Patrick Condon in St. Paul, Minn.; Michael Gormley in Albany, N.Y.; Carla Johnson in Chicago; Judy Lin in Sacramento, Calif.; Bob Salsberg in Boston; Tim Talley in Oklahoma City; and Will Weissert in Austin, Texas.