Dropping tax revenue, rising unemployment and yawning budget gaps are wreaking havoc in states from Arizona to Wisconsin, a new report shows.



CNNMoney reports 10 states face financial peril.

The same economic pressures that pushed California to the brink of insolvency are wreaking havoc on other states, a new report has found.



The 10 most troubled states are: Arizona, California, Florida, Illinois, Michigan, Nevada, New Jersey, Oregon, Rhode Island and Wisconsin.



Other states -- including Colorado, Georgia, Kentucky, New York and Hawaii -- were not far behind.



The list is based on several factors, including the loss of state revenue, size of budget gaps, unemployment and foreclosure rates, poor money management practices, and state laws governing the passage of budgets.



In a separate study released Wednesday, the Center on Budget and Policy Priorities found that states will likely have to make steep cuts in their fiscal 2011 budgets, which start next July 1 in most states. That's because the critical federal stimulus dollars will run out by the end of 2010.



These cuts could take nearly a percentage point off the national gross domestic product and cost the nation 900,000 jobs, the study found.



The Center on Budget and Policy Priorities, a liberal research group, says the states need additional federal fiscal relief to avoid budget cuts that will hurt both the economy and people. State and local spending accounts for about one-eighth of the GDP.



And in California, Gov. Arnold Schwarzenegger said Tuesday that his state is facing a budget gap of up to $7 billion. The state will likely announce across-the-board spending cuts in January.



"So we just have to hang in there, tighten our belts and live within our means," he said.



The center would like to see the federal government allocate another $50 billion, while economist Mark Zandi said about half of that would be needed. Congress should pass the additional aid now since states are currently crafting their fiscal 2011 budgets.



Budget projections show that states could face deficits as large as $260 billion in 2011 and 2012 after stimulus funding is exhausted. State economies usually take up to two years longer to recover after the nation's fiscal health begins to improve.



New budget cuts and tax increases "will be a serious drag on the economy at just the wrong time," said Mark Zandi, chief economist at Moody's Economy.com.



Without assistance, the economy could slide back into a recession, he said

Stimulus Not Needed

Keynesian Claptrap History Lesson

So we just have to hang in there, tighten our belts and live within our means