State Budgets Caught in Economy's Freefall

Declining tax revenue may leave them $26B short next fiscal year

(NEWSER) - The slumping economy will pummel state budgets in the next fiscal year, leaving them at least $26 billion short, according to a survey from the National Conference of State Legislatures. Payrolls fell drastically in March and consumer confidence is low, a double whammy for state tax revenue. "With a few exceptions, state finances are deteriorating, in some cases considerably,” the survey said. More»

State might slash education funds, free inmates early

(NEWSER) - California's dire financial straits may force the early release of 30,000 low-risk inmates and bring drastic cuts in education, the Los Angeles Times reports. Arnold Schwarzenegger will declare a fiscal emergency next month as the state wrestles with a $14.5 billion budget gap. The governor has ordered agencies to explore spending cuts of 10% across the board, which could soften opposition to future tax increases. More»

Governator orders across-the-board cuts as deficit nears $10B

(NEWSER) - With the housing crisis laying waste to California’s coffers, Arnold Schwarzenegger yesterday ordered all state agencies to cut budgets by 10%, the LA Times reports. “We are among a handful of states that has a lot of exposure to the housing crash,” said an economist. Property, sales, and income taxes are all down, threatening to balloon the deficit to $10 billion. More»

It faces the same troubles that shook Greece

(NEWSER) - Greece's financial trouble may have seemed far off before it helped send the stock market into a tizzy. Business Insider says the same kind of mess could easily hit even closer to home, in California. A sampling of its 16 reasons:

• Even after last year's huge cuts, the state still has a $20 billion budget gap. And that doesn't include "nearly $200 billion in loans and other unstated debt."
• The state, which has the lowest S&P debt rating of any state, also is home to seven of the nation's most unemployed cities.

The economy should be Obama's top priority: Henninger

(NEWSER) - Barack Obama makes health care sound like the most pressing issue in American life, but with unemployment at 10% and the country still officially in recession, Daniel Henninger wonders why he's "draining a dwindling reservoir of presidential capital." The cost of health care may be a problem for many, but government's job of fixing wrecked markets is not nearly over—and voters agree, with 87% dissatisfied with the economy. For the Wall Street Journal columnist, "even more so now than way back in 1992: It's still the economy, stupid." More»