46 States STILL Face Bankruptcy
In February of 2009 (back before I even owned this .com and was still slumming it on blogspot), I wrote 46 States Could Face Bankruptcy in FY09/FY10, sharing a really frightening chart from the Center on Budget and Policy Priorities that painted a grim picture for state governments going forward. Thanks to a sweet pick-up by my friend Panzner over at Financial Armageddon, the article still gets a decent amount of traffic to this day and we haven't even hit the deadline yet.
Guess what? Still a problem.
Californians don’t see much evidence that the worst economic contraction since the Great Depression is coming to an end.
Unemployment was 12.4 percent in May, 2.7 percentage points higher than the national rate. Lawmakers gridlocked over how to close a $19 billion budget gap are weighing the termination of the main welfare program for 1.3 million poor families or borrowing more than $9 billion in the bond market. California, tied with Illinois for the lowest credit rating of any state, is diverting a rising portion of tax revenue to service debt, Bloomberg Markets magazine reports in its August issue.
Far from rebounding, the Golden State, with a $1.8 trillion economy that’s larger than Russia’s, is sinking deeper into its financial funk. And it’s not alone.
Even as the U.S. appears to be on the mend -- gross domestic product has climbed three straight quarters -- finances in Arizona, Illinois, New Jersey, New York and other states show few signs of improvement. Forty-six states face budget shortfalls that add up to $112 billion for the fiscal year ending next June, according to the Center on Budget and Policy Priorities, a Washington research institution. State spending is 12 percent of U.S. GDP.
So? Glad to see we worked that out.