CHEYENNE -- During the ongoing recession, states are scrambling to find new dollars as their revenues shrink.

States are looking at more so-called "sin" taxes on tobacco, for example, and are trying out employee furloughs and amnesty programs to get people to pay their back taxes without penalty.

A Rockfeller Institute report said the second quarter of 2009 saw the largest decrease in state tax collections since 1963, said Jim Eads, executive director of the Federation of Tax Administrators.

The organization includes tax officials in all 50 states.

During a talk to the Wyoming Taxpayers Association, Eads noted the economic stimulus money will run out next year.

One state administrator referred to what's coming as "a cliff," Eads said.

"It's not a pretty picture out there for the states," Eads said. "This is a dire time and people have to decide what they want their government to do."

People will accept taxes if they believe the system is fair, he said.

If they don't, they will believe the tax protesters who organize the "tea parties."

Eads told of an array of efforts by the states to raise money. The state of Virginia adopted a 10 percent tax on movies shown in motel rooms. One study said 78 percent of those movies are adult films, Eads said.

Financially strapped California is looking at a value-added tax. Lately, amnesties have been allowed in some states to get residents to pay back taxes by forgiving any penalties.

"It's a good way to get a short infusion of money," Eads said. But states cannot give a succession of amnesties given the likely backlash from law-abiding taxpayers.

A lot of states are forming tax reform commissions.

The Main Street Fairness Act is a bill before Congress that would allow states to tap a new source of sales tax dollars -- online sales from companies like Amazon.

It is supported by Wyoming's senior Sen. Mike Enzi.

The divisive issue, Eads said, concerns the state paying vendors to collect and remit the sales tax.

"The question is how much," Eads said. Some states estimate the collection cost will take half of the new tax revenue.

"There's been an effective lobby against this bill," he said.

Some members of Congress are opposed on grounds it represents a tax increase.

Although the federal government can run deficits, the states cannot.

Ohio spent about $1 million from its rainy-day fund to cover a budget deficit.

This left $89 in Ohio's rainy-day fund, he said.

Contact capital bureau reporter Joan Barron at 307-632-1244 or joan.barron@trib.com