The Liberty Tree Lantern

Matthew Scott
Nov 11th 2009 at 1:00PM

When California Treasurer Bill Lockyer sought a $7 billion federal loan guarantee from Treasury Secretary Timothy Geithner in May, it was a clear indication that states, and not just financial institutions, were struggling mightily to find firm fiscal footing in the face of the Great Recession.

As states continue to grapple with the current harsh economic conditions, the Pew Center on the States has compiled a list of the 10 that are closest to financial collapse, part of a report on the budgetary health of all 50 states. The report warns of potentially damaging consequences if states fail to take decisive measures to fix their money woes.

While California’s economic struggles, such as issuing IOUs to state employees and business contractors, have been well documented, many more states are facing a combination of economic, money-management and political pressures that are driving them to the brink of collapse. The Pew report cites high home foreclosure rates, increasing joblessness, declining state revenues, poor money management, legal and political obstacles to balanced budgets and the size of budget gaps as the six factors that contribute to most of the problems.

States Teetering on the Edge

The report points out that all states but two — Montana and North Dakota — faced budget shortfalls for fiscal year 2010, adding up to an estimated $162 billion in budget gaps. Tax collections in all states declined a record 11.7% from first quarter of 2008 to the first quarter of 2009, and unemployment continued to rise nationally, topping 10% this month.

The Terrible 10

By combining weighted scores for each state’s rank in its six contributory factors, Pew created a list of the 10 that are in the highest degree of peril. They are: California, Arizona, Rhode Island, Michigan, Oregon, Nevada, Florida, New Jersey, Illinois and Wisconsin. Close behind those terrible 10 are Colorado, Georgia, Kentucky, New York and Hawaii.

The report also revealed four common problems that hurt the 10 worst states. Several of them are too dependent on a particular industry that has been devastated by the recession, such as gambling in Nevada and tourism in Florida. Many of the states, like California, New Jersey and Illinois, have a long history of borrowing to close budget gaps. Several have legal limitations that prevent them from making adjustments. For example, Oregon has a revenue cap that forces the state to deliver rebates to taxpayers in good times or bad. And most states just put off the tough decisions until it was too late.

Here’s the worst-10 list in the order that Pew ranked each state, with highlights of what hurt each one:

California – Budget shortfall: 49.3%
“California topped all states for the magnitude of its budget shortfall in fiscal year 2010, both in dollars and in share — in this case, nearly half — of its general funds, which pay for most state operations.”

Arizona – Budget shortfall: 41.1%
Like many states, “Arizona’s lawmakers relied on one-time fixes to balance its budgets instead of making long-term changes,” the report said. Lawmakers were still wrestling with a $1 billion gap in this year’s budget in October.

Rhode Island – Budget shortfall: 19.2%
On top of its poor record of fiscal management, “Rhode Island constantly ranks near the top of states with the highest unemployment rates, and last year it had the highest home foreclosure rate in all of New England.”

Michigan – Budget shortfall: 12.0%
“Two of the Big Three Detroit-based automakers went bankrupt in 2009, sending shockwaves through a state that is on track to lose a quarter of it jobs this decade.”

Nevada – Budget shortfall: 37.8%
“Nevada’s unique gaming-based economy is in jeopardy, as is its state budget that relies on gambling sales to provide 60% of its revenues.”

Oregon ­– Budget shortfall: 14.5%
“State revenues plummeted 19% between the first quarter of 2008 and the first quarter of 2009, a reflection of Oregon’s heavy reliance on income taxes,” the report said. Voters have rejected adding a sales tax nine times, thwarting attempts at creating a new source of state revenue.

Florida – Budget shortfall: 22.8%
“For the first time since World War II, Florida’s population is shrinking. This is a disturbing revelation for a state that has built its economy — and structured its budget — on the assumption that throngs of new residents will move to its sunny shores each year.”

New Jersey – Budget shortfall: 29.9%
“New Jersey is playing catch-up after years of fiscal mismanagement and a daunting structural imbalance between what it collects and what it spends.”

Illinois – Budget shortfall: 47.3%
“Since the last recession earlier this decade, the state piled up huge backlogs of Medicaid bills and borrowed money to pay its pension obligations,” the report said. The 2010 budget shortfall topped $13.2 billion, among the worst in the nation.

Wisconsin – Budget shortfall: 23.2%
“Wisconsin’s history of budget shortfalls and pattern of borrowing frequently to cover operating expenses, among other measures, made it poorly positioned to weather the most recent severe economic downturn.”

People from Wisconsin;  The question becomes is this reported Wisconsin budget shortfall before OR after the $3 BILLION Dollar heist of the Federal Government “Stimulus” package that our dear Socialist Comrade Governor James Doyle fingered and placed in the budget kitty?  Assuming it is after throwing the Stimulus money in the pot; 1) How bad is the Wisconsin Budget without the $3 BILLION? And 2) What the hell are we going to do next year?  I wonder if WEAC will take I.O.U.s?

Seriously, people of Wisconsin;  Isn’t it time for us to at least agree to talk about these things when we get together at the taverns, cub scout meetings, school functions, church, parades, etc…?  What is this crap about not wanting to talk about “politics” right now?  Any Wisconsin person who says something like that, when somebody who really cares is trying to talk about these issues so that WE THE PEOPLE can learn something about it and then DO SOMETHING ABOUT our State Socialistic / Unionistic Government, ought to have their heads examined!  Our whole State of Wisconsin could collapse just because some/many of us don’t “feel” like talking about it.  YOU DON’T HAVE MUCH TIME, FOLKS.  You better starta talk’n and caring about it,  but fast!

And now the Federal Government wants to pile on Health Care and Cap and Trade (Tax) to add to the cost of the average Wisconsin family budget by as much as $10,000.00 or MORE a year?  And I suppose the State of Wisconsin “might” want to raise our taxes “just a little bit” right?  ARE YOU CRAZY?  Do you know how many Wisconsinites DON’T even have a job?   What is the matter with you State of WI Congressmen?  When are you going to stop listening to WEAC and all the other Unions and do something for the people who put you there in the first place?  BTW: Stealing tax money and doing a “special” project for your local community isn’t going to cut the mustard anymore.  We’re on to that crapola!  We are sick and tired of you guys manipulating our minds and our communities with “be quiet presents”.  That is exactly how we got in this mess and now we understand what you have been doing to us individually, our State of Wisconsin and our country as a whole.  If you want to know where to stick that “special” project for our community just before election time, BEND OVER and we’ll show you!

I have a novel idea!  Why don’t you just let us keep our own money and we’ll do our own special projects?  And, as our money accumulates and we are able to keep more and more of our own earnings and grow and perhaps start our own businesses and hire more people and give them raises, we might even help you out a little as WE decide we want to.  In fact, if you leave us and our earnings alone, we will help out our friends and neighbors in need because we are Godly people who love and care for our neighbors, friends and family.  We see what you did with the money you stole from us turning Wisconsin into the Eighth worse Business Tax Climate State in the entire country <hotlink.  Now it is time for us to see what we can do with our own money.  Let’s see who does it better, Wisconsin Government or Wisconsinites.  Or, are you planning on destroying the rest of our jobs and our lives?