46 States Facing Greek-Like Budget Crisis and Austerity Cuts

46 States Facing Greek-Like Budget Crisis
http://www.businessinsider.com/think-tank-46-states-facing-greek-like-budget-crisis-2010-6

It's not just California, Illinois, and New York.

According to the Center on Budget and Policy Priorities, 46 states are facing a severe "Greek-like" debt problem.

Bloomberg:

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.

A failure to bail out the states will result in a slashing of GDP, and naturally more job losses.

The 18 States Facing The Most Brutal Austerity Cuts
http://www.businessinsider.com/18-states-facing-the-most-painful-austerity-cuts-for-next-year-2010-6

Even the sober Center on Budget and Policy Priorities says 46 states are facing a Greek-like crisis. These state governments must inaugurate an austerity regime to cut spending by $112 billion for FY2011.

FY2011 begins on Thursday.

States have already cut over $300 billion from budgets in the past two years to make up for rising costs and disappearing revenue.
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Click here to see the states facing a brutal 2011 >

States of Crisis for 46 Governments Facing Greek-Style Deficits
http://www.bloomberg.com/news/2010-06-25/states-of-crisis-widen-as-46-governments-in-u-s-face-greek-style-deficits.html

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.

“States are going to have to cut back spending and raise taxes the same way Greece and Spain are,” says Dean Baker, co- director of the Center for Economic and Policy Research in Washington. “That runs counter to stimulating the economy and will put a big damper on the recovery in the latter half of this year.”

Stimulus Dries Up

State budget woes are a worsening drag on growth as the federal government tries to wean the economy from two years of extraordinary support. By Jan. 1, funds from the $787 billion federal stimulus bill will dry up. That money from Washington has helped cushion state budgets as tax revenue has plunged.

State leaders won’t be able to ride out this cycle the way they have in the past. The budget holes are too large. For the first time since 1962, sales and income tax revenue fell for five straight quarters, through December 2009, according to the Nelson A. Rockefeller Institute of Government at the State University of New York at Albany.

Lawmakers need to overhaul tax policy, underfunded public pensions and entitlement spending programs such as Medicaid if they want to establish long-term plans that will foster growth, says former New Jersey Governor Christine Todd Whitman.

If they fail to act, state fiscal positions will steadily erode and hurt the U.S. economy through 2060, according to a March 2010 report prepared for Congress by the U.S. Government Accountability Office.

‘Major Surgery’

“States don’t have a choice anymore,” Whitman says. “These problems are going to require major surgery.”