State Surpluses Spark Debate On Tax Cuts, Spending

As they open their legislative sessions, politicians in many states are facing a pleasant election-year challenge: What to do with all the extra money?

A slow but steady economic recovery is generating more tax revenue than many states had anticipated. That means governors and lawmakers must decide whether to use it to cut taxes, boost spending or save more.

The debate could unfold along partisan lines, with Republicans pushing for deeper tax cuts and Democrats seeking to spend more on education and social services. But clashes have arisen even within the same party.

Some economists and budget analysts are urging caution. They say the surpluses are partially the result of a surging stock market and one-time events and may not be sustainable in the long run.