Illinois, California, Pennsylvania, Connecticut, Arizona, Mississippi, and Ohio.

What do these states all have in common? As of today, they have no state budget. July 1 is the beginning of a new fiscal year for many states (and companies) and this group of states has failed to pass a new budget for the next year. The majority of the states are facing budget short falls which make citizens face the realities of two things – fewer services and more taxes.

The problem is that budgets are based on taxes which generate income for states. Since there are many more people who are out of work, this affects the income for the state and conversely people need more public services which means that states have to spend more for public assistance and other programs.

Several states are raising taxes in order to balance the budget or to close the shortfall gap. No one really likes paying taxes, but if it were between being jobless or underemployed and having a good job, paying additional taxes while being employed would be what people would do.

Property taxes also generate a significant amount of money for localities and states. When the housing market tanked, many people were stuck with the same tax rate or higher because they are paying a hidden tax for those foreclosed properties. Also, with more unemployed people using public services such as health care because they can’t afford a direct health plan, or bridge coverage then if an emergency happens, they go to a hospital or free health care facility.

Rethinking how tax money will be used at this point will only do so much. But when you have states like California which lost a great deal of revenue because of property taxes and then more people will have to be laid off because of it, this brings to light a different problem – have our taxes been used wisely or can taxes be levied on people in another way?

For additional sales tax, there are some ways around that, if you buy things on sale, used or online you pay less tax. Another way, is to go to an area that has a lower tax rate. Generally grocery items have a lower tax rate, so you don’t pay as much, and fewer taxes are collected. Increasing the income tax only works if people are employed and even then if people aren’t gainfully employed there may be very little or no taxes to collect.

There are three states that have no shortfalls, maybe the rest of the country can seek their guidance and see what they did in order to have a balanced budget. After all, friends help friends when they are making financial mistakes – states should help each other.

Maybe it is time to rethink either Fair Tax or Flat Tax systems.