Editor’s Note: From Maine to California, state governments are struggling with the worst budget crisis in a half-century. This is the first installment in an ongoing series by The Associated Press examining the real-life consequences of tough times and tough choices.

Cutting services and raising taxes. Firing civil servants, freeing inmates early, squeezing health care for poor families. In almost every state, the options facing governors and lawmakers these days are grim.

State governments that went on a spree of tax cuts and higher spending in the flush 1990s now find the bills are due. And with less money to spend, politicians must make difficult choices with implications far beyond the statehouse.

The pain will spread in the coming year, but hardship is already evident – for state workers laid off in Connecticut, for Medicaid patients deprived of services in Missouri and Oklahoma, for homeless families turned away from overflowing shelters in Massachusetts.

“I was shocked – I didn’t know prosecutors were going to be laid off,” said Carrie Bernier, 32, who has a young daughter and prosecuted domestic violence cases in Stamford, Conn., until her layoff this month.

The decisions legislators make in the weeks and months ahead will affect millions of Americans beyond state employees or poor people who depend on government for medical care.

Most will likely feel the impact: drivers forced to stand in longer lines to renew licenses, parents saddled with higher college tuition bills, smokers and drinkers paying more and more, museum-goers who find doors closing early – or permanently.

Already, some states have been forced to make one of the most painful cuts of all: to education. And with war looming as a possibility, no one knows how much worse things can get.

As 24 new governors take office, their budget options are further limited because many states’ reserve funds have been exhausted and there are no more quick-fix financial gimmicks. Lawmakers must choose between tax increases or spending cuts – or both.

Even a quick turnaround in the economy would be too late to prevent the kind of budget-slashing states are considering.

“States are facing a perfect storm with deteriorating tax bases, an explosion of health-care costs, coupled with a virtual collapse of capital gains tax revenues and corporate profit taxes,” said Raymond Scheppach, executive director of the National Governors Association.

The unique role of state governments leaves them caught in an economic vise. They provide a vast array of services, from roads, law enforcement and education to recreation, regulation and social services. Legions of state employees keep the machine working.

But government runs on money that comes from a healthy economy – taxes from workers’ incomes, retail sales and business profits. The weak economy has left most states with a shortfall, lacking enough revenue to pay for salaries and programs.

According to the NGA, states are short a total of $50 billion this fiscal year (ending June 30 in most states) and up to $70 billion next year – the worst financial crisis for the states at least since World War II. And every state except Vermont is required to balance its budget.

A handful of states are avoiding major difficulties. Wyoming and New Mexico are flush because of a natural gas boom, while Vermont averted a shortfall by spending late ’90s surpluses on one-time projects rather than recurring programs.

Among the hard-hit states, California leads the pack, with a projected shortfall of $34.8 billion for an 18-month span of 2003-04.

To pay the bills, Gov. Gray Davis presented what he calls “one of the toughest budget plans ever” – proposing $8.3 billion in tax increases and $20.7 billion in budget cuts. School spending alone would be slashed more than $5 billion.

Another likely target is a low-income housing project that was to be built starting this summer in Santa Barbara.

“It’s devastating that the people who need the money the most are the ones who lose it first,” said Sister Alicia Martin, executive director of a Roman Catholic charity that is donating about 20 acres for the project.

Reasons for the crises vary from state to state – a drop in tourism hurt Florida and Hawaii; in New York, the Sept. 11 attacks caused widespread job losses.

Yet some pivotal factors apply almost everywhere. Lawmakers and governors eagerly – some critics would say recklessly – spent the surging state revenues of the late 1990s. Though some put money aside for the long-expected downturn at the boom’s end, they were unprepared for the length and breadth of the financial beating.

“The last Legislature had a party, and left this Legislature with a hangover,” said Texas Comptroller Carole Keeton Strayhorn, blaming lawmakers for her state’s $9.9 billion budget gap.

Even as recession set in, the cost of Medicaid and other health programs – which account for about 30 percent of state spending – continued to rise. Caught in a spiral of lower revenues and higher bills, more than 40 states are grappling with budget shortfalls.

If states were hoping for swift help from the federal government, President Bush’s new tax-cutting plan was a disappointment. It offered no significant direct assistance to states, and raised the prospect of diminished tax revenues for the many states whose income tax codes are tied to the federal tax code.

So where do states go from here?

Long-term solutions may require major changes to Medicaid – the taxpayer-financed health care system for low-income Americans – as well as steps to help states cope with tax revenues that boom and then bust. Already, virtually every state is cutting back on Medicaid coverage.

Among other responses:

. Many states have raised cigarette and alcohol taxes.

. Some have sought early access to funds they were awarded under the multiyear settlement with the tobacco industry.

. Maryland’s new governor, Robert Ehrlich, wants to bring slot machines into his state.

. Iowa Gov. Tom Vilsack hopes to start collecting sales taxes on Internet transactions.

In Oregon – reeling from the nation’s highest jobless rate because of high-tech cuts – voters are being asked to make a tough choice on their own: They will decide in a special election Tuesday whether to raise their state income taxes by 5 percent for three years.

If voters reject the increase, lawmakers could be forced to slice more than $300 million from state programs. Among the possibilities: laying off state troopers, reducing school funding beyond a recent 2.5 percent cut and closing addiction-treatment centers.

Oregon has already seen its share of cuts: About 110,000 low-income residents are losing dental care, mental health and alcohol and drug treatment. On Saturday, about 1,800 ailing elderly people will lose state funding for home health care. And because of layoffs and attrition, there are about 600 fewer teachers in schools this year.

The tough times have politicians nationwide venturing off traditional partisan paths. Other Democratic governors besides Davis are contemplating deep cuts to social programs; two Republican governors, Mike Huckabee of Arkansas and Dirk Kempthorne of Idaho, jolted lawmakers of their own party by proposing sales tax increases.

Governors of some states have adamantly ruled out tax increases as a remedy; others see no way to avoid them. Huckabee, for example, said his proposed sales tax increase of five-eighths of a cent is necessary to fund court-ordered changes in Arkansas’ school funding formula.

Arizona lawmakers have attacked their budget crisis the other way – by cutting. They voted to eliminate more than 1,500 state jobs, while Nebraska has eliminated 300 state-funded jobs. The nation’s only state anti-pornography czar lost her job due to budget-cutting in Utah.

In Massachusetts, facing a deficit of up to $3 billion, a 5 percent cutback in state funds has meant longer stays for some homeless families at the Project Hope shelter in Boston.

“It has hugely impacted some of the housing search services that would help people move from shelters to permanent housing,” said Sister Margaret Leonard, executive director of the home. “Where are people going to go?”

Like California, other states are reluctantly looking at the millions they spend on schools.

Illinois lawmakers broke a string of funding increases for K-12 schools last year, while tuition is expected to rise at least 10 percent at Michigan’s state colleges this fall. Alabama’s education budget was cut two years ago and may suffer again because of declining tax revenues.

Teri Gisi, a sixth-grade teacher at Delraida Elementary School in Montgomery, Ala., worries that further cuts will worsen classroom crowding and weaken teacher training, making the school year even bleaker.

“Already almost all of the teachers have to go into their own pockets to make up the loss for the supplies they need,” she said. “Field trips would be affected by more cuts – these kids deserve to get out.”

Some kids are already out. A number of districts across the country have cut the school week to four days to save on buses and heating.

Another unhappy option for lawmakers: reducing payments that help cover medical costs for the neediest.

With New York staring at a $12 billion hole, the state’s nursing home operators fear they could see reductions in Medicaid reimbursement.

“It’s a difficult year and Medicaid is an easy target,” said David Gentner, chief executive of Grace Manor, a 167-bed, not-for-profit Buffalo nursing home that relies on Medicaid for 95 percent of its budget.

California’s low-income health insurance plan, Medi-Cal, has been hit by cuts already, and benefits will likely be scaled back further.

Leticia Huerta, 26, a mother of two, said the clinic in her Los Angeles neighborhood was closed recently, so she must now take two separate and often crowded bus rides to reach a free clinic near the University of Southern California.

“That’s hard to do when you have children who are sick,” she said. “I have to start out early to get to my appointments.”

In several states, prison construction projects have been postponed. Illinois’ $143 million, maximum-security Thomson Correctional Center was completed months ago, with room for 2,200 inmates, but stands empty because the state can’t afford to run it.

Kentucky prosecutors were enraged when Gov. Paul Patton ordered the early release of 567 inmates in December. Yet similar proposals for early releases – or for more lenient sentencing – are surfacing in other states.

“I would certainly rather let felons out of jails than take teachers out of classrooms,” Patton said in a recent television interview.

Patton challenged lawmakers to choose among the unpalatable options for coming up with $509 million.

“The problem, quite frankly, is nobody wants to bell this cat,” said the House Democratic floor leader, Greg Stumbo. “There are two possible solutions, cut spending or raise revenue. Nobody really wants to be the father of either one of those proposals.”