The budget also closes a projected $200 million deficit in the current year and does not raise taxes beyond those that were raised last year in the largest tax increase in state history.

With state revenues slowing to a trickle as the end of April draws near, the state's top fiscal analyst said that California could be "a few billion dollars" shy of Gov. Jerry Brown's budget projections through June 2013.

Gov. Jerry Brown said Tuesday that the state budget deficit could increase by $1 billion or more above the $9.2 billion his administration estimated in January.

The Democratic House and Republican Senate have until 3 a.m. Thursday to make final decisions in order for a budget to be ready for a vote by both chambers on Friday, the 59th day of the legislative session.

The Senate approved its version of the state's $19.3 billion budget for the next two years Thursday night - a plan that differs from the House proposal primarily by taking additional steps to curb the state's debt.

The state's debt would be 6.8 percent of revenues under a plan approved by the House earlier this week. That's down from 7.1 percent in the governor's original proposal, but not enough to appease Senate Republicans.

State officials announced a $323 million surplus today, but the money was automatically committed to paying the state's debt to public schools and replenishing budget reserves.

New Jersey Governor Chris Christie will say next week how he'll pay for the first phase of a 10 percent income-tax cut for the second-wealthiest U.S. state's residents even as he deals with as much as $1.3 billion in higher costs for pensions and debt.

A provision in Gov. Andrew Cuomo's proposed budget amendments could greatly expand the power of state and local governments to borrow money with less independent oversight while potentially avoiding approval from voters or the Legislature, according to three state officials familiar with the proposal.

House Democrats are thinking of going into debt to help plug the big $1.5 billion hole in the state budget, a scheme that could eliminate the need for the Legislature's much-talked-about plan to go the voters for a tax increase.

States should use the budget solutions of avoiding budget gimmicks and use any additional revenue to first eliminate all the dubious financial devices from budgets and to avoid state debt.

North Carolina should limit non-voter-approved debt. Any further borrowing by the state should be subject to voter approval. It should also reform state employee pensions by moving to more portable and flexible benefits, such as a 401(k). State government should set aside reserves to cover future health care costs for retired state employees. Health Savings Accounts would be one solution and will remain an option at least until 2018, when the state will need to meet federal health insurance regulations.