10 States Face Looming Budget Disasters

(AP)  A study released Wednesday warns that nine states are barreling toward an economic disaster similar to California's ongoing fiscal crisis that has been marked by increased borrowing and budget-busting deficits.

The budget woes could mean higher taxes, accelerated layoffs of government employees, more crowded classrooms and fewer services in the coming year for some of the nation's most populous states.

Arizona, Florida, Illinois, Michigan, Nevada, New Jersey, Oregon, Rhode Island and Wisconsin join California as those most at risk of fiscal calamity, according to the report by the Pew Center on the States.

Double-digit budget gaps, rising unemployment, high home foreclosure rates and built-in budget constraints are the key reasons.

The analysis urged lawmakers and governors in those states to take quick action to head off a wider economic catastrophe. The 10 states account for more than one-third of America's population and economic output, according to the report.

"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."

California leads the most vulnerable states identified by Pew, which describes it as having poor money-management practices. According to the Legislative Analyst's Office, 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 - since February as tax revenues plunged.

Many of those fixes aren't expected to last. The state's temporary tax hikes 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 likely run a deficit of between $12.4 billion and $14.4 billion when he releases his next spending plan in January. The top estimate amounts to 17 percent of the state's $84.6 billion general fund budget, the main account for day-to-day spending. General fund spending in California has dropped nearly $20 billion over the past two years.

The governor warned that the toughest cuts are ahead.

"I think that we are not out of the woods yet," Schwarzenegger said this week.

[beeker252]

CA's problem is the budget bandaid that just keeps getting worse. The current agreement between the Governor and the Legislature is simply accounting gimmicks, raiding the local government and kicking the can down the road which by then he is terned limited and the blame will fall on someone else. My take is fix the Prop 13 because it had the effect of limit the local government's ability to respond to financial problem and then you have the state giving money out to people who don't qualified in the first place(illegal aliens using our resources). In short you have two of the extremes going on and none of sustainable in the long term.
For FL, the problem comes from relying on visitors from out of state buying properties so they get tax breaks. Amendment 1 passed which reduced the taxes local government collected forcing them to raise it elsewhere (something I knew would happen)plus the state taking over the funding of the school budget, forcing the local school board be at the mercy of the legislature(code word: Republicans)of how much money they will get. As a matter of fact the state's budget show school funding in 2008 but in prior years did not have it. For the business groups they get all kinds of tax exemptions because they have lobbyists pleading for it when they have the money to pay their fair share.

[NM Glider Pilot]

As Margaret Thatcher said (loosely quoted), "Socialism is fine, until you run out of other people's money..." and that, folks, is what has happened (and is happening) across America. The entitlement programs are draining our life's blood (America's treasure) and ending our nation. Too many people want something for nothing and are too stupid to realize, as Robert Heinlein would put it, "TANSTAAFL" (There ain't no such thing as a free lunch). Democrats, pull your head out! Everyone else: vote them out!

[talk_down_2_you]

O right "glider" - the trillion dollars we wasted in Iraq and the hundreds of billions poured each year into entitlement programs for our defense contractors (our only industry now besides prisons and entertainment) have no draining effect do they?

Right now the Navy is building two "test ships" at $460-million a piece supposedly to beat up those Somali pirates-- u mean with all the crap they have now they can't blow down a few pirates? They need a fleet of $460-million a piece "fast" boats to kill a few pirates. It would be cheaper to give the Somalis the money or just blow the Somali nation to kingdom come for all I care.

And I'm former US Army not some hippie, but I'm so tired of nit-wits who blame everything on the poor just like Pox news tell 'em too with their fake Tea Party paid for by the Insurance industry.

[ubrew12]

Thatcher: "Socialism is fine, until you run out of other people's money..."

We haven't run out of other people's money. The wealthiest 1% of America now owns 40% of America (up from 20% when Reagan became president). They are doing very well indeed. Its the rest of America that is broke.

I'm sure the wealthiest 1% thank you for your advocacy.

[curiously1]

This is what happpens when you vote for entertainers to run a state. Unfortunately, we vote by what we see and not what we should think !

[thatchmo62]

We should have elected Gary Coleman (aka Arnold of Diff'rent Strokes) instead of the Terminator when they both were running for Gray Davis' job after the recall. Arnold is no better than the typical CA Republican or Democrat politician which is not saying very much. We are doomed.

[I_am_me1953]

Heck I have a couple of suggestions:

For:
California
1. get rid of Queen Nancy
2. check for illegal workers, deport them and fine the hell out of the employers who hired the illegals
3. Make hollywood pay higher taxes

Nevada
1. Vote out harriet Ried from the US Senate
2. check for illegal workers, deport them and fine the hell out of the employers who hired the illegals.
3. Start scimming of the take at the casions BEFORE the organized wise guys come in and scim.

Florida
1. ship all those old folk yankee immigrants back up north to NJ and Wisconsin where they came from.
2. Ship all those cubans back to Fidel
3. Elect Jimmy Buffett as Govenor.

New Jersey
Well there really is no help/hope for Jersey except for the Giants.

Wisconsin
Unfortunately, like NJ, The Packers is the only good thing in Wisconsin.

Illinois
Just wait, 4 more years your beloved BHO will be returning to you, "Hang in There Baby."

Michigan ?

Rhode Island and oregan
1. Giant off-shore wind and wave power generation farms
2. Nuclear waste dump

[Omnivorous]

The government exploded under Bush1, then grew exponentially under gingrich/bubba, finally got totally out of control under Bush2 and is now systematically destroying America under Obama.

It is time to get back to some real principles and hold the parties accountable for thier actions.

The pc disaster that was Ft. Hood was a failure of both parties and evidence of a complete lack of connection with common sense.

[dangyankee69]

The bottom line - 10 states that combined compose 1/3 of the nations population and economic output are unlikely to climb out of the 'Great Recession' because they lack the political leadership which would be necessary to get the job done.

This isn't about the past fool it's about the lack of a future. Not just because we aren't able to find the money to invest in education and infrastructre, but because we don't have the political will to do what needs to be done.

[tkelly80]

Interestingly the states in trouble are predominately democrat..the two that aren't FL and AZ have a huge aging population...don't blame it on Bush...blame high entitlement programs..Unions etc...

think through the issue...

[ubrew12]

In California, you can't raise taxes or pass a budget without 2/3rd's of the legislature. That means that 1/3rd of the population (GOP) can hold the other 2/3rd's hostage on the budget. And that directly explains CA's budgetary problems. Since passing Proposition 13, many wealthy landowner californians actually pay lower state taxes than many poorer working californians.

CA government is broke because CA doesn't have a democracy. Any fool could have told them this was going to happen: you trash your democracy, you trash your state.

[stillunbanable]

"How do you blame their economic woes on Bush?"

Let me answer this one Veteran:
Bush's entire economy was based on war. He invested absolutely nothing else in america. In fact, he stripped america of all it's assets to fund his war. All the proceeds from his mega-profitable war went directly to him and his buddies. Now, since he did not invest in america in the areas of technology and manufacturing and education, the rest of the world caught up while america was busy watching Jerry Springer and they took the lead. If the only technology you in vest in is weapons, it does the economy little good since you do really want to sell your weapons to foreign countries, since you will probably end up starting a war with them in the near future. You know, like Afghanistan and Iran. So, if you can't sell that technology, your economy dumps.

[stephand]

You do not know what you are talking about...

Most of these states did what many individuals did. They went on a spending spree assuming the money from the housing bubble (in this case property taxes) will keep going up forever. Nothing to do with Afghanistan and Iraq.

The sooner people stop "blaming" and start taking responsibility, the sooner the problems will get solved.

[Deanna559]

Where in the world is all of California's money going towards? This crisis is definitely affecting us in California. Arnold seems to be cutting back on education funds much more than on anything else. Does he not realize that education is the key to success and without it, there is no future. Has he even stopped to think of that. In my school, due to the budget cuts, some classes have been completely eliminated. This is completely bizarre. He should have just stuck to acting!

[BlandNancy]

A large chunk of California's money is being spent on the costs of illegal immigrants. Yet many of it's municipalities insist on being
sanctuaries for these people. This is wrong, and an unnecessary drain
on the legal taxpayers of that state.

[lakota2012]

Instead of finding the usual scapegoats like the governor or illegals, why not put the blame squarely on the people of CA, for passing and not correcting the problem of capping property taxes due to Prop 13 passed way back in 1978?

The proposition's passage resulted in a cap on property tax rates in the state, reducing them by an average of 57%. In addition to lowering property taxes, the initiative also contained language requiring a two-thirds majority in both legislative houses for future increases in all state tax rates or amounts of revenue collected, including income tax rates. By limiting state revenue, state spending on necessary items like education will continue now and in the future. Get used to it!

The imbalance between state spending and state tax revenues had contributed to near constant budget crisis that has pushed the state to near bankruptcy and deadlocked the political system. California public schools, which in the 1960s had been ranked nationally as among the best, have fallen to 48th in many surveys of student achievement.

Estimates are that Proposition 13 has saved California taxpayers over $528 billion. This is a direct link to the problematic budget problems California has endured due to the inherent inequality of the Prop. 13 tax scheme.

[rufusfan]

We are not alone. the europeans are facing many of the same problems as we are. The economy may be in recession but the people are down right depressed. Just once, I would like to see a bad economy really affect those individuals in the political and bureaucrat classes

[lakota2012]

While COLA for SS recipients has been frozen for 2010/2011 and those that are not part of the 10.2% unemployed have seen wages stagnated, our representatives have voted for nice pay raises for themselves.