01/17/2012 - As the U.S. economy struggled to get back on its feet over the past few years, a lot of states found themselves contending with big budget deficits. They responded by firing workers, raising taxes and cutting spending. Now the fiscal picture for a lot of states is brightening a bit—but many still face enormous challenges.

Arizona, for example, was hit hard by the real estate meltdown. At the height of the recession the state's finances got so weak that Arizona leaders took an unprecedented step: They sold off most of the buildings in the capitol complex, then leased them back. This year, in her State of the State address, Republican Gov. Jan Brewer told legislators it was time to buy the buildings back.

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Sue Urahn, with the Pew Center on the States, says that after struggling for years with huge budget deficits, many states are seeing light at the end of the tunnel.

"We are seeing improvements—meaningful improvements—on the revenue side and states have cut costs significantly, so the fiscal situation is better in many cases," Urahn says.

Read the article or listen to the audio at npr.org.