3 States Leading 32 That Are Facing Budget Shortfalls
The US economy and economies around the world are collectively feeling the pinch of a financial market that is in a total mess right now. To emphasize this scope of this crisis I wanted to bring some attention to the individual states of the US. There are presently 32 states that would be two thirds of the states in the union that are facing budget shortfalls for the current fiscal year and for 2010 as well. That to me speaks volumes as to what kind of crisis the economy truly is in right now.
Most people will agree that the economy is in recession and there is a lot of trouble on the horizon before we are going to see a turn around. The question of course is how are the states going to be able to turn things around and then on a country wide level how will the country come together to turn this economy around. People are spending less in all fields of business and leisure and the states are seeing their revenues fall short big time.
So how do the states make up for the budget shortfalls? They basically have three options available to them and they are cutting their spending, raising their taxes or drawing off any reserves they may have. Most states will opt to draw on their reserves first then go with a combination of cutting their spending and raising the taxes. The last two options are never a very popular alternative as there is always a group in the community that will get their state funded budgets cut or their taxes raised.
When the state has to cut spending it often leads to budget cuts for programs that are in place to help the citizens of the state. What’s odd to me is that three leading states that have the biggest shortfalls are also some of the most densely populated and rich with corporations and resources. They are NJ, NY and CA these three states account for $30 billion of the $48 billion that is being reported short for all the states. It’s amazing to me that three states can be such a big thorn in the side of the other 47 states. Granted these 3 states probably generate more money that most other states as well. More money more problems as the old saying goes.
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