The following post on another blog was of interest. My comments will follow after the large block quote.
10 States Nearing Financial Collapse
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The Top (or Bottom?) 10
1. California – We’ll start with the largest, California, with a budget shortfall of 49.3 percent. Yes, that’s correct. They are only taking in about half the money needed to fund their expenses.
2. Arizona – In second place we have Arizona with a budget deficit of 41.1 percent. In the budget in October, the lawmakers still had to figure out how to close their $1 billion budget gap.
3. Rhode Island – Rhode Island is ranked third. This state has a budget shortfall of 19.2 percent which is lower than most of the others in the top 10. It has been documented that they have had poor fiscal management and the highest unemployment in New England.
4. Michigan – Michigan comes if after and has a budget shortfall of 12.0 percent. This state has heavily relied on the auto industry and two out the three auto manufactures based in Detroit went bankrupt in 2009. It is also estimated that the state will lose about a quarter of its jobs in the next decade.
5. Nevada – Next is Nevada and their budget deficit stands at 37.8 percent. The state budget does rely on the gambling industry for about 60 percent of its revenues. It’s hard to see many people hitting the casinos anytime soon with a sluggish economic recovery on the horizon.
6. Oregon – Then comes Oregon, looking at a budget deficit of 14.5 percent. This state heavily relies on income taxes and the timber industry. A sales tax has been proposed quite a few times, but has been met by strong opposition from voters, and consequently has shut down just as many times.
7. Florida – Florida will see shortcomings of 22.8 percent in their revenues to balance the budget. The population is decreasing and that, along with the state’s contributions to the housing bubble burst, has put it at this position on the list.
8. New Jersey – New Jersey is confronted with a budget shortfall of 29.9 percent due to years of poor fiscal management and unbalanced budgets. It doesn’t help that the state has been in the spotlight numerous times for corruption at the highest levels.
9. Illinois – Illinois, home state of our President, is currently faced with a budget shortfall of 47.3 percent. The state has very high Medicaid bill and also borrowed heavily to meet its pension obligations. With the budget shortfall topping off at $13.2 billion, it is one of the worst in the country.
10. Wisconsin – Wisconsin is in the tenth place with a budget shortfall of 23.2 percent. This is due to a history of borrowing to cover the state’s expenses.
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A few items above immediately caught my attention:
I wonder who is going to lend CA the money it needs? I would think AZ is in a worse position since it lacks the same industrial base. The majority of growth for AZ was based on real estate around Phoenix.
MI only looks “better” (12% shortfall) compared to the other states because they have already cut many services and furloughed state workers. Try driving into MI to go hunting without losing your car in a pothole or off a broken bridge –on the highway. Need a rest stop to relieve yourself? Sorry, many are now closed. This is just the stuff you can see. What you don’t see are the state and county services no longer being provided to many of the state’s elderly residents.
NV must be run by perma-teens who said last year: “Hey, let’s project our budget in advance based on what we think we’re going to get when times are good!”
Basing a state’s budget on casino revenue is insane. Guess who finances a large chunk of casino gambling: Elderly people living off of autoworker pensions. Remember all those auto factories that have been closed this past year and all the pension buyouts at lower dollar amounts? BTW, the smaller percentage of people still working in those auto factories do not have the same pension plan.
You should be getting a sinking feeling right now about where those state budgets and their associated services will be in 10 years. Those future projections for NV need to show casino revenue dropping far off the charts –like a suicide into the Grand Canyon.
IL’s “huge backlog of medicaid bills” means healthcare providers are not being paid. I can tell you for a fact that this led to medical service offices closing and hospitals laying people off in other states. Once your doctors and nurses can’t make ends meet, then how does that affect their support staff and all the industries which provide everything from gauze to cleaning solutions? How does that affect their payments into state income tax and sales tax?
Who or what are these states going to tax in the future to make ends meet?
At some point they won’t be able to raise taxes any higher without people literally being unable to pay into the system. This will cause a cascade failure. Likewise, add enough frustration and some other unforeseen factors and people could completely drop out of the official payment economy or actively revolt against the state itself.
Many states left with possible scenarios which challenge their authority will pick the easiest route available to them: cutting state workers (numbers/salaries/pensions/benefits) and/or refusing (or failing) to provide services to the weakest members of society. This is already the course many have taken. Without real jobs for people which provide stable revenue for the state, the situation will only get worse.
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