Posted on 11/12/2009 3:15:56 PM PST by Diana in Wisconsin
In Arizona, the budget has grown so gloomy that lawmakers are considering mortgaging Capitol buildings. In Michigan, state officials dealing with the nation's highest unemployment rate are slashing spending on schools and health care.
Drastic financial remedies are no longer limited to California, where a historic budget crisis earlier this year grew so bad that state agencies issued IOUs to pay bills.
A study released Wednesday warned that at least nine other big states are also barreling toward economic disaster, raising the likelihood of higher taxes, more government layoffs and deep cuts in services.
The report by the Pew Center on the States found that Arizona, Florida, Illinois, Michigan, Nevada, New Jersey, Oregon, Rhode Island and Wisconsin are also at grave risk. Double-digit budget gaps, rising unemployment, high foreclosure rates and built-in budget constraints are the key reasons.
"While California often takes the spotlight, other states are facing hardships just as daunting," said Susan Urahn, managing director of the Washington, D.C.-based center. "Decisions these states make as they try to navigate the recession will play a role in how quickly the entire nation recovers."
The analysis, "Beyond California: States in Fiscal Peril," urged lawmakers and governors in those states to take quick action to head off a wider catastrophe. The 10 states account for more than one-third of the nation's population and economic output, according to the report.
Historically, states have their worst tax revenue year soon after a national recession ends. At the same time, higher joblessness and underemployment mean more people need government-sponsored health care and social safety-net programs, further taxing state services.
California leads the most vulnerable states identified by the report, which describes it as having poor money-management practices. Since February, California has made nearly $60 billion in budget adjustments in the form of cuts to education and social service programs, temporary tax hikes, one-time gimmicks and stimulus spending, according to the Legislative Analyst's Office.
Many of those fixes are not expected to last. The state's temporary tax increases will begin to expire at the end of 2010, while federal stimulus spending will begin to run out a year after that.
Gov. Arnold Schwarzenegger estimates California will run a deficit of $12.4 billion to $14.4 billion when he releases his next spending plan in January. The governor warned that the toughest cuts are ahead.
"I think that we are not out of the woods yet," Schwarzenegger said this week.
At the same time, the Legislature is hamstrung by requirements that budget bills and tax increases be passed with a two-thirds majority, a mandate that the report labeled "a recipe for gridlock."
The Pew report was based on data available as of July 31 and scored all 50 states based on revenue changes, unemployment, foreclosures and budget requirements. It also gave them grades. California and Rhode Island scored worst with D-pluses, then New Jersey and Illinois with C-minuses.
In reviewing why some states are suffering more than others, Pew found that the 10 states tend to rely heavily on one type of industry, have a history of persistent budget shortfalls or face legal constraints making it extra difficult to implement major changes, such as tax increases.
Many require a supermajority vote for passing tax increases or budget bills.
Several state legislatures were unable to enact long-term fixes. Instead, they asked voters or governors to make the call, or used accounting gimmicks to put off the hard choices until later.
For example:
- Arizona lawmakers relied on one-time fixes to balance recent budgets as the state's home foreclosure rate surpassed California's and the nationwide average. Among the many ideas being explored by the state are a plan to mortgage state buildings, then rent the property until the state regains ownership at the end of the contract.
- Michigan, where two of the Detroit Three automakers filed for bankruptcy protection this year, continues to offer tax incentives even as they take a toll on the state's pocketbook, leading to declining tax revenue. According to the Pew study, Michigan offered $6.3 billion more in total tax exemptions, credits and deductions than it actually collected in taxes in 2008.
- Illinois, which has run deficits every year since 2001, is facing an $11.7 billion budget gap for its next fiscal year, beginning in July, according to the Center on Budget and Policy Priorities. Pew's Government Performance Project ranked Illinois behind only California and Rhode Island for its lack of fiscal management on paying medical bills and pension liabilities.
- With Florida facing a shrinking population for the first time since World War II, Republican Gov. Charlie Crist and the GOP-controlled Legislature balanced a $5.9 billion shortfall with cuts, federal stimulus money and tax hikes, including a $1-a-pack tax increase on cigarettes. But the future remains uncertain.
"Florida continues to face the same challenges as last year, including a very austere budgetary environment," said Rep. David Rivera, a Miami Republican who chairs both of the Florida House's two appropriations councils.
Well, that’s what happens when you let the Madison Maniacs run wild on the fiscal field.
Maybe somebody should point out it was the good people that bought and paid for the Capitol via taxes.
So, basically now the government wants to steal it. “Mortgage” indeed.
Illinois would be just fine if we could somehow sucker Wisconsin into buying Chicago and Cook County from us. Before Wisconsin goes broke, of course. Buying Chicago would certainly spped up their going broke process!
But these states' financial problems are never caused by outrageous, profligate, out of control spending on their part! How much of these state budgets are spent on useless social programs, give-aways to minority groups to buy their votes, junkets for state personnel etc. Yeah sure, they are relying too much on one industry --- the poor, hardworking taxpayer!
For the record, Michigan schools receive nearly $10,000 per pupil.
The Michigan government last week proposed "slashing" that figure by $165. Gasp!
How many Americans have had to tighten their budget by less than two percent?
Wisconsin has a strong socialist bent going back to the 30’s doesn’t it?
Much of this is legacy cost of Retirement and Retiree Health-Care. Another reason for "O" to want it to funnel them into his Care to keep these Ponzi Schemes float.
George Will warned that GM was on the verge of an unsubtainable legacy nightmare 3 or 4 years ago and he was right. Warning signs are going out for the US going broke (Moody's) but these States are 1st to go. Tic Toc....
And the city of Madison is going to levy another tax for a new downtown library. Yesterday while I was listening to the local news during Rush, they were so excited that Middleton was going to get more jobs...but they were government jobs. I swear when I talk to people in government in this state, they think that money comes from the tooth fairy and that a government job is not more taxes, but somehow a positive for economic growth.
How much you asking for Chicago? If it is over five bucks, then it’s not worth the expense. You can keep Cook Co. We’ve got Dane Co.
There was a time when Chicago was part of Wisconsin. Before Wisconsin became a state its southern boundary was Fullerton Ave in Chicago
Now our illustrious Governor is heading to Israel to Pi$$ away more of our hard earned money.
Maybe we can move the state so he can’t find his way back.
“Yeah sure, they are relying too much on one industry - the poor, hardworking taxpayer!”
Amen to that!
At this rate I honestly wouldn’t be shocked if Walker ran unopposed in Wisconsin...Dems are radioactive even in parts of Milwaukee and Madison now!
I'd say we're already there. Local city gov just OK'd a tax hike and a pay raise for city employees. Phone calls fall on deaf ears. I've had it. Hopefully Walker can win the goober seat next year and we can get rid of some libtards in the legislature.
“I swear when I talk to people in government in this state, they think that money comes from the tooth fairy and that a government job is not more taxes, but somehow a positive for economic growth.”
It really IS insanity, isn’t it? How can they not see that THEIR OWN TAX DOLLARS pay for their jobs, too? It’s not like they’re exempt from them, LOL! “Ooooo! I’m getting a raise! Hey! How come my taxes just went up?” Dorks.
We had the assessor out to our house last week. Mind you, the $3,800/year we pay for the property taxes on our farm are the envy of many in other states.
However, for that $3,800.00 I get this: My trash and recyclables picked up each week.
My ‘city’ (borders Madistan, in Dane County and pays for all of their foolishness, too!) has no schools. It has no Post Office. It has no Library. We’re on a COUNTY Road, so the city isn’t liable for road repairs or plowing in the winter. We have a well, yet we still pay a ‘curb & gutter’ tax. The nearest firestation is 20 MINUTES away. Anyone seen how fast a barn burns? (Hence, the term, ‘Barnburner.’) And I haven’t needed a cop since we moved out here 15 years ago. Oh, also 20 minutes away.
*Rolleyes*
They should be paying ME to live here, LOL!
(And yes, we’ll be leaving Wisconsin as soon as the parents and the old dogs pass on.)
Terminate the Welfare State, and the budgets will balance.
It’s a toss-up between TX and TN for me. Do you fish? If so, you can come live wtih GirlAngler and myself in TN. If not, can you at least clean and cook fish? LOL! :)
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