State budget shortfalls are expected to balloon to $82 billion by 2004. What avenues are available for governors to bring about fiscal solvency in the states? This article assesses their plans to navigate this continuing fiscal storm. The author then reviews the state government revenue situation and draws conclusions based on the content of governors’ 2003 state of the state addresses.

Chapter 2 of the 2003 Book of the States contains the following articles and tables:

Medicaid stands out as the program hit hardest by the economic downturn and rising health care costs. Governors, legislative leaders and Medicaid officials around the country see the program’s current cost trajectory as unsustainable in both the short-term and the long-term. Yet, states have faced similar situations before. As in previous eras of runaway cost growth, state leaders are marvelously adept at developing coping mechanisms. Emerging trends in state responses to the Medicaid crisis may indicate the future direction of Medicaid policy.

Chapter 3 of the 2003 Book of the States contains the following articles and tables:

When it comes to voters’ reactions to initiatives and referenda on the ballot in 2002, “cautious” was the word of the day. Amidst concerns about war, terrorism and the economy, the voters once again defied party labeling and voted their conscience when it came to ballot measures. In a time of great uncertainty, voters picked through the list of statewide ballot measures and systematically made their feelings known, while at the same time not revealing whether their underlying principles lean more liberal or conservative. The great race to categorize the voters’ political beliefs will once again have to wait for another election day.

Chapter 4 of the 2003 Book of the States contains the following articles and tables:

The roles and activities of interest groups and lobbyists in the states have received increased attention with the shift of additional responsibilities to the states in recent years and continuing state revenue problems. The authors have been studying this issue since the early 1980s and report a number of important trends regarding the changing nature of the lobbying game in the state capitals: greater representation; more sophisticated lobbyists and multifaceted lobbying campaigns.

An assessment of political parties in the legislature shows an imbalance in their performance of the overlapping functions of representation on the one hand and governance on the other. In every respect but mobilizing and educating voters, legislative parties are doing an excellent job representing their constituencies. But the performance of the governance function, and especially the tasks of consensus building and institutional maintenance, is more problematic.

The regulation of political money continues to rank high on most states’ list of priorities. Experimentation continues in many areas as reform measures have been adopted both by state legislatures and statewide initiatives. Some discernable trends are clear, including more emphasis on public-funding programs (the “clean elections” movement); regulating the scope, nature and use of contributions; disclosure of political advertisements; stronger enforcement of existing laws and concern regarding independent expenditures.

The American federal system has been shaken by the impact of recent traumatic events, especially the threats to homeland security and the states’ fiscal crises. These developments have produced deep seated tensions across a wide range of intergovernmental relationships. Recent trends toward coercive relations may be ameliorated by strategies fostering contingent collaboration.