“The situation is fairly poor for a lot of states around the country. In fact, most states,” Vermont Governor Jim Douglas, who is chairman of the association, said at a press conference at its annual meeting.

“What we’re finding out from a fiscal standpoint is that the worst is yet to come,” Douglas said.

In a survey conducted last week of 45 of the 50 states, the group found that states have $18.8 billion of budget gaps yet to be closed in fiscal 2010. This comes after they have already imposed measures to eliminate budget imbalances totaling $87 billion in the fiscal year, which for most started last summer.

In the budgets they are drafting for fiscal 2011, states foresee shortfalls of $53.6 billion and for fiscal 2012 $61.6 billion.

“Economists have declared the national recession over. But for those who are still unemployed, for those who have lost their homes, it’s clear that as a nation we have a long way to go,” said Douglas, who added that states’ revenues have plummeted for four quarters in a row.

States’ economic recoveries usually lag national recoveries because of state governments’ increased spending on help for the unemployed and declines in tax payments.

All states except for one, Vermont, are required to balance their budgets, so during the recession they have drastically cut spending on basic programs, laid off workers and boosted revenue through raising taxes and fees.

The $787 billion stimulus plan the U.S. Congress passed a year ago included the largest transfer of money from the federal government to states in the nation’s history. But for many states, most of its funding will run out by December.

New Jersey Governor Chris Christie, also at the press conference, said the stimulus had delayed problems but not solved them.

Douglas said the governors will press President Barack Obama for more help when they visit the White House on Monday.

Sales taxes today mainly, though not exclusively, hit sales of tangible goods like cars and couches. Faced with the worst budget crisis in a generation, many states are looking to expand sales taxes to services, such as lawn care or accountants’ advice. The goal, legislators say, is to broaden the tax base to cover a broader swath of the economy as traditional sources of tax revenue decline.

Although in early stages, service taxes are being considered by legislators around the country. In Kentucky, representatives have introduced a measure to extend sales taxes to some high-end services like limousines and balloon rides. In North Carolina, the legislature last year considered, but didn’t pass, a proposal to tax services such as car repairs and lawn care.

In Maine, the legislature last year passed a law that would lower income taxes for most residents but extend sales taxes to services such as car repairs and dry cleaning. It faces a voter referendum in June.

Many states already tax some services, such as hotel rooms and restaurant tabs. And the service sector is indirectly taxed through the wages of employees providing those services. But as of 2007, the latest data available, only seven states taxed the consumption of professional services such as doctors and lawyers said the Federation of Tax Administrators, a trade group of state tax agencies.

For example, the federal government is slow at reimbursing state Medicaid costs. This makes it difficult to determine the amount the state owes its medical providers at FYE. The state of Michigan uses estimates to work around these types of issues. In other cases, proposed legislation may affect the FYE financial data, forcing the CAFR preparers to wait until the legislation is signed (or not signed) into law before the CAFR may be completed.

In summary, the GFOA 180-day benchmark is the most useful criterion in determining whether a state has issued a timely CAFR. This timeframe allows legislators and other officials the opportunity to review the state financial performance as they prepare future budgets. The ability to review prior years’ financial reports before the next year’s budget process begins provides citizens and their elected officials with critical financial information needed to be knowledgeable participants in this crucial decision making process.

The chart below shows how state rank in actually making the reports available. As you can see Michigan is the best at 120 days, which is still nearly 3 times slower than the federal government or corporations. New Mexico is the slowest at 620 days, or over 1 year and 7 months after the FYE.