Weathering the storm: despite an improving economy, legislative leaders say there are still hard times ahead for states.

• Author: Smith, Edward

It has been the storm here. We led the nation into a recession, and we are now deeply entrenched in one of the greatest economic crises the state has ever seen.

MICHIGAN SENATE MAJORITY LEADER MICHAEL BISHOP

The recession is winding down. The stock market is having a robust run. Most economists see light at the end of the tunnel.

Listen to state legislative leaders, however, and you will hear very little hopeful talk. States face at least a couple of years of tough fiscal sledding, agonizing budget cuts, and real fears about being able to protect the most vulnerable citizens and the most vital programs.

State Legislatures recently talked with six top leaders in their chambers--three Republicans and three Democrats--from across the country about what they will face in the new year. Some are going into new legislative sessions, others will not have a new session until 2011. All expressed a combination of hope with a sober assessment of the work ahead.

"State government lags the rest of the economy by a good six to 18 months, so we're going to still be laying off. We're going to be cutting back," says Massachusetts Senate President Therese Murray. "I'm being optimistic that we've hit bottom and we are going to start really concentrating on job growth and job creation and trying to get out of this very deep hole we are in."

In Florida, Speaker of the House Larry Cretul sounded a similar note. "We've adopted an approach here that we hope for the best but try to prepare for the worst," he says. "We built our budgets in what we would call the economic reality."

State Legislatures asked leaders to reflect on the changes of the past year that included a new president and Congress, a deep recession and a massive stimulus package. They also discussed when they thought their states would return to a stable fiscal footing, what they are trying to preserve amid deep budget cuts and who is hurting the most in their states. They were asked to comment on whether the recession has caused them to rethink the role of state government.

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The economic pain is not spread equally. Some states have had to close budget gaps in excess of 20 percent of their general fund. Others, such as Montana, have had an easier go if it.

"We've been lucky to shield ourselves from the economic downturn," says Montana House Speaker Bob Bergren. "When the country booms, we don't really boom with them. But when they bust, we don't bust with them either."

While...