Prisons, colleges top states' budget cuts: Pew

An Orange County sheriff's deputy handcuffs prisoners he loads them in to jail in Fullerton, California, June , 2009.

WASHINGTON (Reuters) - Faced with a total budget gap of $215 billion for fiscal years 2009 and 2010, most U.S. states looked to their prison and university budgets for relief, according to a report released on Thursday.

At least 18 states raised income or sales taxes to cover budget holes that, when added together, were the equivalent of nearly $700 per man, woman and child in the country, according to the report by the Pew Center on the States.

But nearly double that number, some 35 states, cut higher education spending or increased tuition.

More than half of the states -- at least 26 -- slashed funding to prisons. Seven cut prison spending by more than 10 percent, and another seven closed prisons entirely.

Eighteen states this year asked over 830,000 employees to take furloughs or unpaid leave, Pew said, but tight budgets are also affecting residents, some of them the poorest.

In at least four states, patients enrolled in Medicaid, the healthcare program for the poor jointly administered by the states and federal government, must pay more for care and, in at least eight states, patients have seen benefits cut.

Only seven states looked to gambling revenues to help make up for shortfalls that were first caused by the housing downturn, which cut into property taxes, but have grown due to the longest recession since last century's Great Depression.

"This was a year of fiscal reckoning for states of every size, in every region of the country," said Sue Urahn, managing director of the center, in a statement. "The challenges are far from over -- states will face even tougher choices in the next couple of years."

Even with plummeting revenues, at least 18 states took inspiration from the $787 billion federal economic stimulus plan to try to spend their way back to better days.

According to Pew, Colorado enacted one of the most ambitious stimulus plans that included $50 million for small business loans and job training.

(Reporting by Lisa Lambert; Editing by James Dalgleish)