The economic crisis has caused people to earn and spend less than they used to, causing the states they live in to collect less income taxes and less sales taxes. Nearly all states are in a situation where the amount of money they’re responsible for spending is more than they’re taking in. This is what we call a deficit. Unlike the federal government, all of the states except Vermont are supposedly prohibited, in their state Constitutions or by laws their legislatures have passed, from having deficits.
Yet, somehow states like California, Illinois, New York, and New Jersey have huge debts that represent the piling up of years of deficits, along with huge current deficits. They are finally realizing that they have to get their houses in order. This can only occur one of two ways: cut government spending or raise taxes and fees. Here, we look at what states are doing to close the gap. Some of it is legitimate, some of it is gimmicks, and some of it is downright scary!
Below is a look at various state actions when I maintained this feature in table form!
| Date | About | Action | See more |
| October 6, 2010 | California |
The state’s plan to close the $19 billion deficit was proposed on Wednesday October 6, 2010. The plan relies on a “Large dose of creative accounting.” Basically, the plan is making several assumptions that in turn would help bring down the state’s budget deficit. The plan does not create new taxes or fees, however it does make some assumptions that are dangerous to rely on. |
California Budget Plan Relies on Accounting Maneuvers |
| October 6, 2010 | Louisiana | In June of 2010, Louisiana closed the fiscal year with a $108 million budget deficit. “The state isn’t allowed to deficit spend, so [the governor] must rebalance this years $25.5 billion budget to account for last years problem.” The state said that several agencies will be cut this year to close the budget gap. |
Louisiana Close FY10 with $108 million budget deficit |
| September 30, 2010 | The November Midterm Elections | Social issues are taking the back seat to fiscal (financial) issues in this upcoming election. According to Dan Smith, the director of the political campaigning program at the University of Florida, “The economy is still trumping all else.” The fact that the economy is the most important issue during this upcoming election exemplifies that Americans are coming to the realization that unless we make some serious changes, this bad economic climate can continue for years to come. | Fiscal, not social issues, draw ballot attention |
| September 23, 2010 | California | State and local investigations found that “internal checks and balances which are supposed to be put in place to ensure legal approval of the payroll and the management of bond funds were virtually nonexistent.” This is the first of three audits that will occur. | An Audit Finds a City Spent Uncontrollably |
| September 14, 2010 | Wisconsin | The state was given stimulus money to build a high speed rail network. Traditionally, this issue has had bipartisan support. However, now Republicans are saying that this project represents how Democratic leaders on state and federal levels are spending money that they don’t have. This is sure to be something Republicans might criticize Democrats for during the congressional elections in November. | Republicans fight Wisconsin High-Speed Rail |
| September 8, 2010 | Arizona | The state is considering turning over management of two state parks to private operators so the park sites can be reopened after being shut down due to budget trouble. The state feels that even though they are putting management in the hands of private operators, the decision is benefiting everyone. The president of a booster group for Oracle State Park says, “I’d just like to see the park open.” | Arizona weighs privatization for state parks |
| September 4, 2010 | Minnesota | The state launched a website that allows candidates for governor as well as ordinary Minnesota residents to try and balance the state’s budget. Steve Peterson, a senior policy analyst, when commenting on the site says, “If you can’t tell us how you would balance the budget, should you be running for governor?” The goal of the site is to have the people vote for a governor who will be able to successfully get rid of the state’s $5.8 billion deficit. | Mayors launch online tool to get answers on state budget |
| September 3, 2010 | Maryland | The state finished the fiscal year with a $344 million balance that will now be put into their “Rainy day fund.” Governor Martin O’Malley says, “We still have a way to go, but Maryland still seems to be moving forward in advance of other states.” However Comptroller Peter Franchot was less optimistic and points out that when adjusted for all the legislative action taken during the fiscal year, “Revenues still fell by 3.7%, one of the three-worst performances since 1969.” | State finishes fiscal year on hopeful note |
| September 2, 2010 | Rhode Island | “Despite recent economic woes, the Rhode Island state budget reported a surplus of $17.7 million in its general fund.” The state’s governor says that the state should be able to absorb the predicted $320 million deficit which will come as a result of the end of the federal stimulus program. | R.I. sees surplus in state budget based on preliminary figures |
| September 1, 2010 | Connecticut | The state’s prison population underwent its fourth consecutive monthly increase. Consequently, it now seems less likely that the state can lower its budget deficit. “The legislature’s nonpartisan Office of Fiscal Analysis is projecting a $3.37 billion shortfall built into the 2011-2012 budget, an amount equal to nearly 20% of current spending.” | Rising prison population dampers hopes of budget relief |
| August 27, 2010 | Wisconsin | WTA president says that the state’s budget deficit can be reduced. Todd Berry, president of the Wisconsin Taxpayers Alliance, says that if lawmakers can pass unpopular spending cuts, the 2012 deficit can be reduced. On the flip side, Berry says that there is a possibility that “The projected $2.5 billion deficit can go even higher.” | WTA President: State budget deficit can be reduced |
| August 25, 2010 | California | Governor Arnold Schwarzenegger wants to lower the state’s sales tax and instead tax “all services” that currently go untaxed. David Kline, spokesman for the California Taxpayers’ Association says, “We don’t think it’s a good idea to start taxing even more things in California.” | Schwarzenegger: Lower the state’s sales tax rate and apply it to services now untaxed |
| August 24, 2010 | Colorado | Governor Bill Ritter is using the state’s medical marijuana fund to help balance the state’s budget. He is taking money from the fund which is financed by fees on patients who have cards to use medical marijuana. Ritter was opposed to the idea of medical marijuana when he was district attorney, but he asserts that voters made it legal, not him, and he has a budget to balance. | Ritter turns to medical-marijuana fund to help balance Colorado budget |
| August 23, 2010 | New Jersey | “Last week the Securities and Exchange Commission (SEC) filed fraud charges against New Jersey for misrepresenting its financial obligations…and misleading investors in its bonds.” According to the article, this should come as a wake up call for other states suspected of employing similar techniques when it comes to hiding their budget deficits. | How States Hide Their Budget Deficits |
| August 20, 2010 | Connecticut | Governor Jodi Rell announced Friday that a combination of decreased federal funding as well as greater demand for state services “have led to a projected $63.4 million state budget deficit for the fiscal year which began July 1.” Rell has yet to announce her budget-cutting plans. | Conn. Governor predicts $63.4 million budget deficit |
| August 19, 2010 | Arkansas | Had their “Special state highway funding panel” resume meetings hoping it would “Recommend new ways to pay for major road improvements.” Among the top ideas for funding is to issue bonds which would be backed by a temporary increase in the state’s sales tax. The highway has “needs” (maintenance, construction, etc.) projected to cost $19 billion over ten years, but a projected revenue of only $4 billion. The State is hoping that with these new funding ideas, they can close the $15 billion gap between highway needs and revenue. | Highway commission moves to narrow funding options |
| August 18, 2010 | California | Mac Taylor, a legislative analyst, describes the trouble that California is facing with its deficit problem. Regarding new ideas to close the deficit, Taylor says, “I don’t want to say the well is dry on the kind of budget solutions we can come up with, but its clearly not an easy thing to do.” Additionally, Taylor claims that there is no way to reduce ongoing spending by $20 billion, which is what the state has to do to eliminate the deficit. | On the record with Mac Taylor, California’s top budget watchdog |
| August 17, 2010 | Chicago (Illinois) | Sold off its parking meters without putting any limit on the amount of money the company taking control of the meters can charge. The company doubled the rates and will double them again in the next few years. While the city’s current administration was paid $1.15 billion by the company, city residents may pay up to $3.5 billion in parking fees that will now go the company and not the city. | Group Sues Over Chicago Parking Meter Privatization |
| July 20, 2010 | California | Among tax increases and spending cuts is $2.7 billion saved with accounting gimmicks like moving one work day into the next year. It will also be borrowing $2.1 billion. Wait, doesn’t borrowing mean it’s not really balancing the budget? | California Reaches Budget Deal, With Billions Cut |
| June 8, 2010 | Arizona | Borrowed $300 million using its Supreme Court Building and 12 other buildings as collateral to ensure it will repay the loan. It makes rent/purchase payments on the buildings through 2029, at which time the loans will be repaid and the buildings will again be owned completely by the state. This gives Arizona a big pile of money to help reduce its current deficit but of course obligates the state to make payments to occupy buildings it previously had ownership of! | Arizona Sells Supreme Court Building in $300 Million Bond Deal |
| February 8, 2010 | Arizona | Borrowed $735 million using “the Executive Tower, the Legislative buildings, the Department of Public Safety Headquarters, various State prison facilities and other assets of the State” as collateral to ensure it will repay the loan. It will make rental/purchase payments over the next 20 years, at which time it will again have complete ownership of the buildings. This gives Arizona a big pile of money to help reduce its current deficit but of course obligates the state to make payments to occupy buildings it previously had ownership of! | State sells buildings for $735 million, money to help balance budget |
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June 24, 2009 |
California |
The state ran out of money, so instead of sending employees and businesses it owes money to checks, it will send a piece of paper saying that it knows it owes the money and will pay it back a few months later with interest. This makes it a short-term bond. Note that it can be sold by the holder for less than the amount owed to someone willing to wait to be paid. |