WASHINGTON - State and local governments are facing a fiscal crisis that will be far worse than the 2001 recession because sharp declines in income and sales tax collections will lead to more widespread budget cuts in the months ahead, a new Rockefeller Institute of Government report warns.

But governments may have to issue more debt as a result of their financial difficulties, according to Don Boyd, the author of the report, titled The Damage is Just Beginning, and other market participants.

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