Here’s an excerpt from a good article on state tax cuts and state debt:

States broke? Maybe they cut taxes too much

WASHINGTON — In his new budget proposal, Ohio Republican Gov. John Kasich calls for extending a generous 21 percent cut in state income taxes. The measure was originally part of a sweeping 2005 tax overhaul that abolished the state corporate income tax and phased out a business property tax.

The tax cuts were supposed to stimulate Ohio’s economy and create jobs. But that never happened once the economy tanked. Instead, the changes ended up costing Ohio more than $2 billion a year in lost tax revenue; money that would go a long way toward closing the state’s $8 billion budget gap for fiscal year 2012.

[…]

There’s no question that mammoth state budget problems resulted largely from falling tax revenues, rising costs and greater demand for state services during the recession. But questionable tax reductions at the state and local level made the budget gaps larger — and resulting spending cuts deeper — than they otherwise would have been in many states.

A 2008 study by Arizona State University found that that state’s structural deficits could be traced to 15 years of tax cuts, mainly income-tax reductions that “were not matched by spending cuts of a commensurate size.”

In Texas, which faces a $27 billion budget deficit over the next two years, about one-third of the shortage stems from a 2006 property tax reduction that was linked to an underperforming business tax.

Read more: mcclatchydc.com