Sense on Cents

No, these states are not holding a Powerball Lottery . . . although the states themselves could use the winnings.

These states, amongst others, are barreling toward economic disaster.  Don’t take my word for it. None other than the Pew Center on the States produced a report entitled Beyond California: States in Fiscal Peril:

(High five to MC for bringing this to our attention)

California’s financial problems are in a league of their own. But the same pressures that drove the Golden State toward fiscal disaster are wreaking havoc in a number of states, with potentially damaging consequences for the entire country.

This examination by the Pew Center on the States looks closely at nine states, in addition to California, that are particularly affected by the recession. All of California’s neighbors–Arizona, Nevada and Oregon–and fellow Sun Belt state Florida were severely hit by the bursting housing bubble, landing them on Pew’s list of states facing fiscal difficulties similar to California’s. A Midwestern cluster of states comprising Illinois, Michigan and Wisconsin emerged, too, as did the Northeastern states of New Jersey and Rhode Island.

“Beyond California: States in Fiscal Peril” makes clear that the recession severely impacted states from different geographic regions with different types of economies, tax structures and political leanings.

Download the report. (Adobe PDF)

Download the executive summary. (Adobe PDF)

Scoring the States

The Pew Center on the States compiled its list by scoring all 50 states according to six measurable factors that contributed to California’s ongoing fiscal woes, using the best available data as of July 31, 2009. The state profiles in this report go beyond the data to give a fuller picture of the recession’s deep and pervasive effects on states’ financial and economic well-being. Read more about methodology for “Beyond California.”

Six Factors		Revenue change		Budget gap		Unemployment rate change		Foreclosure rate		Need supermajority?			GPP “money” grade		Score
United States		-11.70%		17.7%5		4.4		1.37%		17 yes, 33 no			B- 5		17
California		-16.20%		49.30%		4.6		2.02%		Yes			D+		30
Arizona		-16.50%		41.10%		3		2.42%		Yes			C+		28
Rhode Island		-12.50%		19.20%		4.5		1.50%		Yes			D+		28
Michigan		-16.50%		12.00%		6		1.47%		Yes			C+		27
Oregon		-19.00%		14.50%		6.4		0.86%		Yes			C+		26
Nevada		1.50%		37.80%		5.2		3.12%		Yes			C+		26
Florida		-11.50%		22.80%		4.4		2.72%		Yes			B-		25
New Jersey		-15.80%		29.90%		3.7		1.18%		No			C-		23
Illinois		-10.90%		47.30%		3.5		1.44%		No			C-		22
Wisconsin		-11.20%		23.20%		4.4		0.96%		No			C+		22

Download the 50-state scorecard. (Adobe PDF)

November 11, 2009

What are the implications? Enormous.

Let’s start with tax increases, work our way to service cuts, continue on to likely shifts in population and go from there.

I don’t pretend to have the answers to the fiscal woes impacting these states, but I do think it is critically important to be aware of the information and situations in these states. To that end, I thank MC for bringing it to our attention.

Color from those living in these specific states would be very much appreciated so we can most effectively navigate the economic landscape.

LD

This entry was posted on Thursday, November 12th, 2009 at 2:25 PM and is filed under California, Economy, General, municipal finance, taxes. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.