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Photo by Scott k. Brown, the Associated Press Republicans celebrate an Election Day 2009 sweep of top posts in Virginia with hopes of more victories in the far larger bounty of races on November 2. Here, Governor-elect Robert McDonnell, center, is flanked by Attorney General-elect Ken Cuccinelli, left, and Lieutenant Governor-elect Bill Bolling.

Barack Obama won the presidency running on a platform of change in 2008, and change also will be the watchword in 2010 at the state level.

Bruising budget battles could put voters in a testy mood and usher in a wave of new faces to lead state government, where Democrats now hold the majority of governorships and statehouses.

In November, 37 states will elect governors and 46 will choose new legislators just as states are trying to emerge from the worst recession since the 1930s. It is a certainty that more than half the faces in the 2010 class of governors-elect will be new, and leadership in almost two dozen statehouse chambers could change political hands as well.

States with some of the biggest budget brawls could be ripe for takeover by the opposing party. Polls and pundits indicate that Democrats are in jeopardy of losing both the governor's mansion and possibly a legislative chamber in Michigan, New York and Pennsylvania. Meanwhile, Republican governorships are rated up for grabs in Arizona, California, Nevada and Rhode Island, and GOP-led chambers are in play in Tennessee, Texas and Montana.

The punishing economy could be an albatross to incumbents and a godsend to challengers in the biggest election for states in four years. All 37 states with gubernatorial races have lost revenue since the recession started. Of the 15 states where incumbents are running, all but four raised taxes or fees, primarily on tobacco, for fiscal year 2010.

Lessons from earlier elections

In what could be a warning for incumbents, voters in the last big gubernatorial election year to fall in the midst of a state budget crisis-2002-were in a mood for change. Four sitting governors were ousted that year, and party control flipped in half of the 36 governors' seats on the ballot.

The GOP lost 10 governors' offices, while the Democrats lost eight. Turnabouts occurred even where the incumbent's party traditionally had been strong, including Georgia, Kansas, Maryland and Tennessee. The handling of the economic downturn was a major factor in many of the 2002 races.

Anti-tax advocates vow to make tax hikes the litmus test for 2010 statehouse and governors' races. "Tax increases are what failed governors do," said Grover Norquist, founder of Americans for Tax Reform and a major advocate of limited government.

Voters in California in May 2009 showed their disdain for higher taxes by overwhelmingly rejecting $6 billion in increases proposed by the legislature and governor. But Oregon voters on January 26 reached the opposite decision, giving popular approval for the first time since 1930 to a general tax increase. Oregonians upheld plans by the governor and legislature to plug a budget gap with $727 million in new taxes on the wealthy and corporations.

More measures on the collection and use of taxpayers' dollars are likely on the 2010 ballot. Twenty-four states allow citizens to put measures on the ballot that can intentionally or unintentionally hamstring lawmakers' ability to cut certain programs or raise taxes.

Anti-tax crusaders probably will try again to use the ballot box to rein in spending, even though they failed to gain traction in 2009 when voters in both Maine and Washington State rejected tax-cap measures modeled after Colorado's controversial Taxpayer's Bill of Rights (TABOR). Maine voters rejected a similar initiative in 2006, as did voters in Nebraska and Oregon.

Photo by Getty Images On a trip to Troy, N.Y., last fall, President Barack Obama greets Governor David Paterson (D). As New York's financial condition has plummeted, so has Paterson's standing with voters, whom he will face for the first time since he inherited his job in March 2008. Paterson is locked in a budget struggle with fellow Democrats in the legislature over his call for cuts to schools and other programs to erase red ink in the budget.

Measures already making their way to the Colorado ballot would cut the income tax and slash at least $1 billion in taxes. And Washington voters may yet get another measure to curb taxes and fees courtesy of Tim Eyman, a conservative political activist who has sponsored at least a dozen ballot proposals in recent years.

"If the legislature goes hog wild," he told The Olympian in November, he will work to put on the ballot the same spending limit measure that was defeated last fall by double digits.

Californians may get the chance to vote on changes to the budget process that many argue would address the root of the state's fiscal problems. Several groups are leading ballot drives for an array of measures, including one that would allow the legislature to increase taxes and pass the budget with a simple majority vote, rather than the two-thirds approval that is more difficult to win and has led to political gridlock in Sacramento. Another proposal would stipulate that groups seeking to pass a ballot measure that commits public funds must identify counterbalancing cuts elsewhere in the budget.

But the outlook for such measures is uncertain. "Many voters are simply too distrustful of state politicians to loosen restrictions on taxes and spending," said Mark Baldassare, president of the Public Policy Institute of California, a San Francisco-based think tank.

California, in a league of its own for fiscal dysfunction, shows what can happen when voters revolt. Californians re-elected Governor Gray Davis (D) in 2002, only to oust him less than a year later in an unprecedented recall election that put Arnold Schwarzenegger (R) into office. A tripling of the car tax and Davis' handling of spiraling budget deficits were partly to blame, while Schwarzenegger ran on a campaign to "tear up the state's credit card" and put the world's eighth-largest economy on more sound fiscal footing after years of "financial recklessness."

Statehouse control at stake

The 2010 election will test incumbents of both political parties. Pushed to the wall by historic revenue drops, incumbents will have to defend decisions to slash programs or increase taxes-even as billions of federal stimulus dollars flowed into state coffers.

Campaigns will heat up just as many lawmakers will have cobbled together budgets fiercely harder to balance than the previous year's despite a national economy that seemed to turn the corner toward recovery.

All but a handful of gubernatorial races are expected to be nail-biters, and control of twice as many statehouse chambers could change to the other party than what typically happens in an even-year election, according to predictions from professional election handicappers.

Legislative term limits in 14 states, including Arizona, California, Florida, Michigan and Ohio, will usher in fresh faces to grapple with huge budget problems.

Also on the ballot are spots for 31 attorneys general and 26 secretaries of state, posts that often serve as launching pads for the governorship. Attorneys general in Arizona, California, Florida, Georgia, Michigan and Oklahoma have expressed interest in their state's top job, and insiders speculated that New York Attorney General Andrew Cuomo might jump into a Democratic primary race against embattled Governor David Paterson. Likewise, Vermont's secretary of state is vying for governor, and Georgia's top election official stepped down in 2009 to make a gubernatorial run.

Control of Congress also is on the line, with Democrats vying to retain the upper hand in both chambers as all 435 House seats and 36 U.S. Senate seats are on the ballot.

The stakes are especially high this year because whichever party wins control in statehouses will have an advantage in redrawing maps for congressional and legislative districts based on new census numbers. Texas, with its growing population, is expected to gain as many as four seats in Congress. Democrats are just two seats from recapturing the state House in Austin, a coup that would snatch the plum redistricting role from the GOP.

Equally important, many Republicans are banking on victories at the state level to reverse the party's national slide, which cost it control of Congress and the majority of governors' seats and legislative chambers in 2006 and the White House in 2008.

Republicans hope to build on momentum from the stunning upset January 19 by Massachusetts State Senator Scott Brown (R) to fill the seat of the late U.S. Senator Edward Kennedy (D). The GOP also won 2009's only gubernatorial races, taking back Virginia with a win by former attorney general Robert McDonnell and ousting one-term New Jersey Governor Jon Corzine (D), the first incumbent governor to face voters after deep budget cuts.

Republican Chris Christie, a former prosecutor, beat Corzine in part by promising to cut taxes while hammering the Democrat for slapping a higher tax on the wealthy. In his campaign, Corzine touted his being the first governor in 60 years to cut state spending, but even campaign appearances by President Obama, who is popular in New Jersey, did not help.

Under Corzine, New Jersey was one of nine states since the recession started to increase taxes on high-income earners to balance budgets. Among that group, only New York's Paterson and Maryland Governor Martin O'Malley (D) will face voters this year.

Budget woes loom over campaigns for governor's seats

Stateline.org Further down the ticket Secretaries of state Voters this fall will elect 26 secretaries of state, a post that in all but 11 states also is the top election official and often the launching pad for other offices. Click here for a printable reference sheet of this year's races. Attorneys general Races for 31 attorneys general will be on the ballot this fall, including open seats in Arizona, California, Florida, Georgia, Michigan, Oklahoma, Rhode Island and South Carolina, where incumbents all expressed interest in governorships. Click here for a printable reference sheet of this year's races.

Intraparty squabbles are a sign of today's hard times as state revenue has trended down for at least four straight quarters even as social spending has increased on safety-net programs such as taxpayer-funded health care.

New York's Paterson is among the 15 incumbent governors hoping to keep their jobs, which in the Empire State comes with promises of widening budget deficits and a turbulent political climate in the Democratic-controlled legislature. Facing a $3.2 billion budget shortfall before 2009 ended, Paterson fought fellow Democratic lawmakers over his demands that popular and generous health care and education programs not be immune from cutbacks. In November, he called lawmakers into special session and warned that New York was running out of money, even after just raising a record $6 billion in new and higher taxes and fees.

More than 2,000 miles away in Arizona, Republican Jan Brewer also has butted heads with her own party since inheriting the governor's job from Janet Napolitano (D), who left office in January 2009 to join Obama's Cabinet. Brewer pushed for a temporary 1-cent sales tax hike to balance a budget $4 billion out of whack. The former secretary of state's prescription of a tax increase, combined with spending cuts, faced a hard sell in a state famous for anti-tax sentiment. As 2009 ended, Arizona's shortfall stood at $1.6 billion.

Throughout 2009, Brewer and Paterson trailed badly in polls. Other incumbents in hard-pressed states also face tough campaigns to keep their jobs. Winning the primary will be the first hurdle for some. Illinois Governor Pat Quinn (D), who ascended to his job last year after former governor Rod Blagojevich (D) was impeached and removed from office, woke up from his February 2 primary to find the results too close to call. According to political handicappers, other Democrats to watch are Chet Culver of Iowa, Deval Patrick of Massachusetts and Ted Strickland of Ohio. Among Republicans, Governors Rick Perry of Texas and Jim Gibbons of Nevada are expected to have competitive primaries in March and June, respectively. The slate of candidates will not be final until as late as September in some states.

Clark County Commissioner Rory Reid, a Democrat like his father, U.S. Senate Majority Leader Harry Reid, is among those vying to become governor of Nevada and take on the stunning challenges of a recession-ravaged state. When gambling and tourism dollars slumped as consumers cut back, Nevada's building boom wrenched to a halt, resulting in unemployment and foreclosure rates that were among the highest in the country.

Photo by Getty Images Republican Chris Christie, left, took over in January as New Jersey's governor after running on a platform of making government smaller, promising not to raise taxes and cutting state spending as much as 25 percent to help plug a $9.5 billion deficit. His running mate, former sheriff Kim Guadagno, right, is the state's first lieutenant governor and also was appointed by Christie to serve as secretary of state.

"We have a state government built for the 19th century and happy to stay there," Reid said in a 30-page blueprint for fundamentally changing Nevada's economy. One of his ideas is to make Nevada the nation's "IT closet" for storing electronic data because it rarely has severe weather.

Political analysts say Schwarzenegger's low approval ratings as he leaves office because of term limits plus voter disgust over California's perennial budget problems open the door for Democrats to regain the office. Attorney General Jerry Brown (D) is leading in polls against several Republican candidates-including former eBay CEO Meg Whitman-in the race to succeed Schwarzenegger, putting Brown in a position to reclaim the job he held from 1975 to 1983 if he decides to run.

Brown has vowed to hold the line on taxes, while Whitman has signed a no-new-taxes pledge and has promised to cut 40,000 state jobs and reduce spending by $15 billion. Steve Poizner, the state insurance commissioner who also wants to be the GOP nominee, is vowing to cut personal, sales and corporate taxes by 10 percent and to cut spending 10 percent over two years.

Brown may not be the only former governor vying for his old job. Running for open seats, former Oregon governor John Kitzhaber (D), who left office in 2003 because of term limits, is seeking an unprecedented third term, while former Georgia governor Roy Barnes (D) wants to reclaim the office he lost in 2002. In Iowa, former governor Terry E. Branstad (R) is challenging Culver, the Democratic incumbent, and many Republicans are hoping former Maryland governor Robert Ehrlich Jr. will run for the post he lost in 2006 to O'Malley. Because all except Brown led during boom years, it could give these former governors a "weird advantage" if voters associate them with good times, said Jennifer Duffy, a senior editor who tracks governors' races for The Cook Political Report , a nonpartisan publication.

If history is a guide, GOP could gain

For many, the election will be a referendum on Obama. "There is no question that the incumbent president has a real effect on the outcomes of gubernatorial elections in at least some states," said Larry J. Sabato, director of the University of Virginia's Center for Politics.

History is not on the Democrats' side. Sabato's research shows that 75 percent of the time, the party that wins the White House loses gubernatorial berths-typically four seats-in the following midterm elections. In 1982, the GOP suffered a net loss of seven gubernatorial spots after Republican Ronald Reagan won the presidency. In 1994, in the first midterm election after Bill Clinton won the White House, his fellow Democrats lost a net of 10 governors' seats, control of 20 legislative chambers and, for the first time in 40 years, control of Congress. Both of those midterm elections came on the heels of national recessions, and the 1994 election also followed a bitter, failed debate in Congress over health care reform.

The 2002 election stands out as an exception, perhaps because it followed the 2001 terrorist attacks that led to high approval ratings for President George W. Bush. Republicans had a net loss of just one governor in the first election after Bush's victory in 2000. And the GOP gained 177 legislative seats, the first time since at least 1938 that the party occupying the White House had not lost seats, according to the National Conference of State Legislatures (NCSL).

Tim Storey, an elections expert at NCSL, cautioned that even unusually high legislative gains by the GOP might not herald a Republican comeback at the state level in 2010 because "Democrats are at such a high-water mark in many states." Going into the elections, Democrats control both chambers in 27 states, nearly twice the 14 controlled by the GOP. Eight states have split control, and Nebraska's unicameral legislature is nonpartisan.