House Majority Leader Eric Cantor said Monday that he believes the states already have the tools they need to ease their debt problems because they can cut spending. Cantor also dismissed the idea that cash-poor states should be allowed to declare bankruptcy.
The idea of letting states declare bankruptcy has been suggested by conservatives such as former Republican House Speaker Newt Gingrich, who is a possible 2012 presidential candidate. Some labor unions say the idea would give states more leverage in cutting worker benefits and pensions.
The Associated Press cites a report as saying 35 states and Puerto Rico expect to have budget gaps during the current fiscal year that ends September 30.
Lawmakers in the northern state of Illinois recently approved a 66 percent increase in the personal income tax, from 3 percent to 5 percent.