The state of South Dakota is facing a $127 million shortfall and deep budget cuts may be needed to offset it. But South Dakota's governor and legislature are not alone in this situation. Nationwide, most states are facing dramatic reductions in revenue.

And that was the main topic of discussion for South Dakota Gov. Dennis Daugaard and the other governors attending the National Governor's Association winter meeting.

This weekend marks the first time the historically large class of governors who took office this year are coming together to discuss the most pressing issues facing our states and the nation. For a majority of these freshman leaders, their first year on the job will be taxing.

Gov. Dennis Daugaard says, "In the short run, we need to deal with our budget difficulties and that involves some difficult choices, some hard cuts. But in the long run, we really need to work on developing our economy. Further economic growth will produce more state revenue, more jobs and get our state budgets back into good shape."

For South Dakota's governor, that means eliminating a $127 million deficit. Daugaard plans to eliminate that shortfall in Fiscal Year 2012 with a 10 percent across the board cut. He says he's confident it can be done.

But North Dakota's governor - whose state is far from seeing red - disagrees. Gov. Jack Dalrymple says, "It is a matter of discipline in spending and fiscal discipline is hard work. It has to take place over a great many years. Trying to fix a budget in like one year is really almost impossible."

The state of North Dakota is the exception - its financial picture much prettier than most states. Also sitting well right now is the state of Wyoming. Gillette had the nation's second-strongest economy last year.

And South Dakota's southern neighbor is also holding its own.

Gov. Dave Heineman says, "When I took over as governor, taxes were too high; our regulatory climate was too high. We reversed that and here we sit today in the state of Nebraska with the second lowest unemployment rate in America at 4.4 %."

But the reality is that the nation's unemployment rate still sits at 9 percent. And there's a lot of work that still needs to be done.

Gov. Steve Beshear says, "Thank goodness that Washington, D.C. is starting to think about balancing budgets. You know all the states have to do that. All of our families are doing it every night around the kitchen table and its time the federal government move in that direction."

The governors' meeting continues through Monday. On the agenda: education reform, energy production and job creation.

Megan Palera