The economic downturn has resulted in reduced tax revenues for the states, creating significant budget problems. States are now with faced with deciding about state employee layoffs, pay cuts, tax increases and service cuts.

One simple. relatively popular, and basically pain-free way to alleviate a state’s budget problems that is only now starting to get some attention is legalizing, taxing and regulating marijuana.

Recently, two states, California and Washington, have put out official analyses of the likely revenue that would be generated from marijuana legalization. The California State Board of Equalization (PDF) determined a marijuana legalization and taxation bill would result in $1.38 billion in new revenue, about $37 per person. The Washington State Office of Finical Management found a legalization and taxation bill in that state would generate about $180 million in state revenue, about $26 per person, plus millions in local taxes.

These two figures were used to create a chart with very rough estimates about how much each state could generate by taxing and regulating marijuana in ways similar to alcohol, based on population:

These are just rough projections to give a ballpark impression of how much potential new revenue is at stake. Obviously, the exact amounts for each state would vary significantly based on several factors like demographics, exact tax rates, consumption rates, design of the law, and rules in surrounding states. Ideally, comparing these figures to the current budget deficits will spur looking at taxing and regulating marijuana as an alternative to some current proposals like massive teacher layoffs.

Interesting Wisconsin could probably generate between $140-210 million from taxing and regulating marijuana, which would be sufficient to coverthis year’s $137 million shortfall that Republican Gov. Scott Walker is using as an excuse to take away collective bargaining for some public sector unions.