According to a recent article in Accounting Today, all but five U.S. states are operating in deficits, a pressure that will almost certainly lead to state and local tax increases or changes that could affect businesses.

Locally, the City of Albuquerque is forecasting a $54.6 million budget shortfall in FY2011, and the state is wrestling with a current fiscal year gap of nearly $1 billion--close to 12 percent of the current fiscal year budget. Gov. Bill Richardson has proposed temporary tax increases totaling $200 million. He has said taxes on food could be considered. The governor also seeks in the current legislative session to expand a Renewable Energy Production Tax Credit.

Nor are our neighbors in the Southwest immune. Arizona, for instance, in the next fiscal year faces a $2.6 billion shortfall; Colorado $1.8 billion; and Utah $700 million. All of these deficits are on top of sizeable gaps in the current fiscal year.

With so many changes afoot, it's an excellent time to touch base with your financial professionals. If your company or your clients need help anticipating these changes, please contact our Tax Services team today. REDW stays abreast of all the latest news and its implications for many types of businesses across the country.

The information contained in this blog is not intended to be tax advice, is of a general nature, and is based on authorities that are subject to change. Application to your specific situation should be determined in consultation with your tax advisor. IRS Circular 230 Disclosure: Any tax advice in this communication is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties that may be imposed on any taxpayer or (ii) promoting, marketing or recommending to another party any matters addressed herein.