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States Facing Bankruptcy

We had previously discussed the problems facing the US Government in handling its budget deficits, but what about the states?  The states are reliant on two things: 1) the receipts of their taxpayers and 2) help from the US Government.  The US Government has a nice little tool in its tool-belt: the ability to print money…something that California and Schwarzenegger are entirely jealous of.  The Center on Budget and Policy Priorities released a piece titled “New Fiscal Year Brings No Relief From Unprecedented State Budget Problems“.  A few of the juicy details:

  • At least 48 states have addressed or still face shortfalls in their budgets for fiscal year 2010.
  • At least 33 states already anticipate deficits for 2011. Initial estimates of these shortfalls total almost $51 billion. As the full extent of 2011 deficits become known, shortfalls are likely to equal $160 to $180 billion.
  • Combined budget gaps for the next two years — state fiscal years 2010 and 2011 — are estimated to total at least $350 billion.

Best of luck to the taxpayers in Arizona, California, New York, Nevada, & Illinois.  Not many are far behind, but the deficits in these states can only mean much higher state taxes.  That should be great for unemployment and job growth…

I hear a tax bill being written...

I hear a tax bill being written...

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