Facing an $8 billion hole in Ohio for fiscal year 2012, Governor John Kasich has proposed extending a 21 percent cut in the personal income tax. As it turns out, that 2005 package of tax cuts eliminated the state's corporate income tax and phased out its business property tax. Those changes drained $2 billion a year from Ohio's coffers without stimulating either its economy or jobs.
As it turns out, Ohio is far from alone:
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.
In Louisiana, lawmakers essentially passed the largest tax cut in state history by rolling back an income-tax hike for high earners in 2007 and again in 2008.
Without those tax reductions, Louisiana wouldn't have had a budget deficit in fiscal year 2010, the 2011 deficit would've been 50 percent less and the 2012 deficit of $1.6 billion would be reduced by about one-third, said Edward Ashworth, the director of the Louisiana Budget Project, a watchdog group.
http://www.perrspectives.com/blog/ But of course, tax cuts are off the table just like they are at the federal level.