Economics Report.State and local governmentsacross the United Statesare facing big budget deficits.Many of these shortfallsinclude promises of futureretirement paymentsfor public employees.Several states have had toborrow money for pension plansthat have fallen belowrequired funding levels.Pay and benefits for public workershave been a target as stateand local governmentstry to cut spending.At the same time, there are effortsin several states to reducethe negotiating rightsof public employees.In many cases,public employee unions haveagreed to accept lower pay.But they oppose effortsto limit collective bargaining.An effort by Republicans to do thatin Wisconsin has led protestersto occupy the state capitol building.Almost every state requiresa balanced budget.Yet worries that stateand local governments might notbe able to repay their debtsare now adding to the costs of borrowing.Illinois had to offer a high returnof nearly six percent on bondsto be repaid by twenty nineteen.Experts say, on average,public employees are paid lessbut have better benefits than workerswith similar skills in private jobs.However, they say these differencesin labor costs are a lotless than some people think.Still, traditional pension planspay a set amount foras long as a retiree lives.States like Georgia, Michigan,Colorado and Ohio are consideringa change for future employees.They might offer retirement planssimilar to what are called 401(k) plans.These are a common form of planoffered by private employers.Employers and workersboth put money into the plan.Workers can invest the moneyin areas like stocks or bonds.Their retirement savings are definedby the return on their investmentsin the plan.Federal workers already havea savings plan similar to a 401(k).John McGlennon headsthe Government Departmentat the College of William & Maryin Virginia.He says the economic crisisof two thousand eight continuesto affect state and local tax collections.Also, many pension fundshave less money because their investmentshave yet to fully recoverfrom the recession.But Professor McGlennon saysthings could change.JOHN McGLENNON: "In terms of the future,states are not necessarily going to bein a rosy conditionin the next couple of years.But they do tend to recover muchmore rapidly than we tend to anticipate."And that's the VOA Special EnglishEconomics Report,written by Mario Ritter.For more business news,go to 51voa.com.