The headlines are everywhere. The state of New Mexico has frozen hiring and taken other measures to cut $200 million from the current fiscal-year budget to avoid a deficit. The Albuquerque mayor is leaving 140 jobs unfilled to trim $20 million from the city’s budget. The Gadsden Independent School District in southern New Mexico is shifting its use of $3.9 million in state funds — a stopgap measure to avoid immediately firing 98 employees and making other cuts.

But Gadsden still has to figure out how to make cuts to next fiscal year’s budget, which begins July 1, and layoffs appear likely. The state is required by law to operate in the black, and projections indicate that, to accomplish that in the next fiscal year, the Legislature and governor have to figure out by January how to cut between $200 million and $1 billion from a state budget of about $6 billion. Even before that, some say, the state’s current fiscal-year deficit could rise as high as $500 million, and more drastic measures may be necessary.

New Mexico has more money in reserves than it did when Gov. Bill Richardson took office, but Richardson hired more state employees and increased spending. His tenure, until now, has been marked by an oil and gas boom, and he’s been able to implement many new programs.

That era is at an end. The crash in oil and gas prices was harder and quicker than most predicted. Richardson spokesman Gilbert Gallegos said the governor is “prepared to do what it takes to ensure the budget remains balanced,” but he may not be here to do it when the Legislature convenes in January. He could be moving to Washington, D.C.

Regardless, I’ve been struck lately by how dramatically the economic crash is hitting New Mexico. This is a state where, historically, economic highs and lows aren’t as drastic as they are across the nation, largely because of the high number of government jobs. But we’re a state that’s dependent on oil and gas revenues, and the drop in prices is creating a painful situation.

It’s bad everywhere

The crisis in New Mexico may not be as severe as it is in some other places. In California, Gov. Arnold Schwarzenegger wants to raise taxes by $4.7 billion and cut spending by $4.5 billion to overcome an $11.2 billion revenue shortfall. The move comes two months after state lawmakers worked to cover a separate $15 billion shortfall. New York Mayor Michael Bloomberg is halting a property tax rebate and floating the idea of raising the city’s personal income tax by 15 percent to address a projected revenue shortfall of $4 billion over the next two years.

Other states are also cutting. Some cities are asking for a share of the federal government’s $700 billion bailout pot of cash.

The point: It’s bad everywhere. Today we learned that consumer prices dropped 1 percent in October — the largest one-month drop on record. That, coupled with continued declines in consumer spending and new home and apartment construction, threatens to cut the revenue of local governments even further.

Richardson wants to deal with the situation without cutting services or jobs or dipping into reserves, but many believe that isn’t possible. My fear is that the strain on government is going to significantly deepen the nation’s economic crisis. Governments across the nation are going to have to make dramatic cuts that include layoffs; this will further increase unemployment, decrease consumer spending and increase defaults on debts of mortgages, credit cards, and auto and student loans. In addition, governments may begin defaulting on their own bond payments in larger numbers.

This is going to play out over the next several months as the policymaking bodies of local governments meet to address shortfalls in current fiscal-year budgets and approve budgets for the next fiscal year.

It’s not going to be pretty.