New Study Shows Ten States Face Fiscal Crisis - by Stephen Lendman
The Pew Center on the States (PCS) "works to advance state policies that serve the public interest," through "credible research (to) advance nonpartisan, pragmatic solutions for pressing problems affecting Americans." Its new report titled, "Beyond California: States in Fiscal Peril," says the following:
"Many economists are optimistic that America's Great Recession may be turning the corner. States, however, are not celebrating. Plagued by record-setting revenue losses, the housing bust and credit crisis, high unemployment and a host of other challenges, (they've) struggled through nearly two years of budgetary pain - and are bracing for more."
California is worst off, but hardly alone. Others include Arizona, Florida, Illinois, Michigan, Nevada, New Jersey, Oregon, Rhode Island and Wisconsin. Pew's Managing Director on the States, Susan Urahn, says:
"America's economic recovery and prosperity hinge in key ways on how quickly and to what degree states emerge from the Great Recession." For many, their "fiscal health hangs in the balance."
Economic, money-management, and political factors "pushed California to the brink of insolvency," but other states face the same pressures. As a result, their residents can expect higher taxes, more layoffs, reduced social services, longer waits for them, over-crowded classrooms, fewer teachers, higher tuitions, and less help for the unemployed and most needy.
The above 10 states account for over one-third of the nation's population and output. Pressures on them portend new ones nationwide. Pew scored all 50 by six factors:
-- high foreclosure rates;
-- growing unemployment;
-- budget gaps;
-- legal obstacles to balanced budgets; and
-- poor money-management practices.
Excluded were issues of long-term debt and public employee pension liabilities that darken the outlook further.
The 10 worst off states are examined, but close behind are Colorado, Georgia, Kentucky, New York and Hawaii. Only two, Montana and North Dakota, are fiscally solvent and expect to meet their 2010 budgets, the latter because it alone has what the others don't - its own bank able to create credit for state businesses and residents at an affordable cost. As a result, with the lowest unemployment rate in the country at 4%, it's created jobs at a time they're vanishing in the other 49 and the District of Columbia.
According to financial writer Ellen Brown, "In this dark firmament....one bright star shines" - in terms of GDP and personal income growth and the state's largest ever $1.3 billion budget surplus when other states face deficits.
For fiscal year 2010, some of them are coping with their largest ever budget shortfalls. Nationwide it's about $162 billion because of rising unemployment and lower tax revenues. More recently another $16 billion was added, but the numbers keep rising. Pew's data is based on the best available through July 31, 2009.