Higher taxes, fewer criminals in prison and a hold on new health care and education programs - all could be on the horizon for state governments, a leading state expert told those gathered today at a Public Affairs Council conference on state and local government relations.

William T. Pound, executive director of the National Conference of State Legislatures, presented his audience with bleak statistics:  Compared with fiscal 2008, some state governments this year have seen a 25 percent to 30 percent drop in revenues; state sales tax collections have declined as much as 10 percent; collectively, state legislatures are grappling with an estimated $376 billion in budget deficits; and property tax declines - which typically lag behind a drop in property values - are likely to come next.

"I would suggest to you that it's going to be even worse in 2010 and maybe even in 2011," said Pound, the opening speaker at the two-day "State and Local Government Relations Seminar" held in Alexandria, Va. "All of these (figures) will grow... barring a major turnaround in the economy." 

While federal stimulus money has helped close some state budget gaps, Pound expects that public support for such spending is dwindling and that funds will dry up soon. That means state governments will be forced to find other ways to balance their budgets.

Despite measures states have already taken - for instance, there was an estimated $26 billion in state tax increases this year -- Pound predicts there could be "some movement" on raising so-called "sin taxes," the potential for new taxes on sugar products and soda, a reluctance to introduce state health care or education reforms until Congress is done with its own work on both matters and no incarceration for some criminals to ease crowded prisons. 

"For the first time in at least 20 years, states are thinking about reducing incarceration levels - particularly as it relates to drug- and alcohol-(related)" convictions, Pound said.

Pound also noted that recent news reports indicate a D.C.-based think tank close to the Obama administration may soon propose a major, "broad-based" tax increase.