david merriman - with university of illinois says the 2 solutions are deeper cuts to services or large tax increases he says both will be even more painful next year... because states will not be able to rely on stimulus money from the federal government.california able to pass a budget without higher taxes illinois: likely to raise taxes later this year or next year david merriman says he's pretty optimistic that higher state taxes will *not hurt an economic recovery for the nation: state tax rate small relative to federal taxes ... business taxes are small part of their bills.. income and sales taxes relatively minor in scheme of things. i don't think it will have a major role - in fact having structurally sound system.. more to encourage development.. than higher taxes busiensses don't know wha ttax burdens going to be.. those kinds of things make it difficult for state to operate.. personal hardship as well this could be a real issue.. in some sense.. most leverage to get states get house in order if they downgrading bonds... cause a lot of costs to state.. raise cost of borrowing