Foreclosures for sale are contributing significantly to the economic challenges faced by 10 U.S. states, according to a report from the Pew Center.
Based on the report, California is not the only state struggling from state budget problems. Nine other states, namely Arizona, Florida, Michigan, Illinois, Nevada, Oregon, New Jersey, Wisconsin and Rhode Island are also headed towards economic disaster if interventions are not adequate.
The report cited double-digit budget deficits, record-high unemployment rates, budget constraints and large numbers of foreclosures as the major reasons for their difficulties.
Susan Urahn of the Pew Center said that California has been in the spotlight for so long, but other states have been struggling financially over the past months. She called on the governors and legislators of the ten states to act quickly to head off economic disaster because the population and economic production of these ten states account for over 33 percent of the whole country's output.
Based on Pew Center data, states have lower tax revenues during and after recessions, but the current recession has overburdened state governments because of the sharp rise in number of people needing state services such as health care, social services and housing.
The report cited California as having the worst economic situation largely because of its poor financial management practices. California also had the highest number of foreclosures in the third quarter, with more than 250,000 of its residential units notified of foreclosure actions, almost 51,000 units of which are already foreclosures for sale.
Early this year, California has started implementing measures to stop its financial hemorrhage, such as cutting allotments to social services and educational programs, increasing taxes temporarily and granting stimulus money.
According to Governor Arnold Schwarzenegger, residents of the state should expect more cuts in services because he expects the budget plan to be released in January to show a deficit of up to $14.4 billion.
The report also said that the states continue to suffer because they have been implementing temporary fixes to fiscal problems. For instance, Michigan, clobbered by the bankruptcy of two Detroit automakers, is still providing tax incentives despite sharp drops in revenues.
Arizona, which has surpassed California in foreclosure rates, has been considering mortgaging its state buildings and then renting them while the state recovers. In the third quarter, more than 50,000 residential units in Arizona were in foreclosure, with more than 36,000 units for trustee sale and more than 14,000 already foreclosures for sale.