Business

10 States Hurtling Toward California-Level Disaster

By Derek Thompson
Saved Stories

California was only the beginning.

Nine more states are "barreling toward an economic disaster" according to a new Pew poll that sees deep service cuts and temporary tax hikes to avoid fiscal calamity. Some of these states will be familiar to Atlantic Business readers. I've been leading the funeral cry for the united states of MichiCaliFlAriVada (that's Michigan, California, Florida, Arizona and Nevada), and all five states are on Pew's list. Rounding out the ten are Illinois, New Jersey, Oregon, Rhode Island and Wisconsin. Here's the graph from the Pew Center on the States:


Six Factors
Revenue change
Budget gap
Unemployment rate change
Foreclosure rate
Need supermajority?

GPP "money" grade
Score














United States
-11.70%
17.7%5
4.4
1.37%
17 yes, 33 no
B- 5
17














California
-16.20%
49.30%
4.6
2.02%
Yes

D+
30














Arizona
-16.50%
41.10%
3
2.42%
Yes

C+
28














Rhode Island
-12.50%
19.20%
4.5
1.50%
Yes

D+
28














Michigan
-16.50%
12.00%
6
1.47%
Yes

C+
27














Oregon
-19.00%
14.50%
6.4
0.86%
Yes

C+
26














Nevada
1.50%
37.80%
5.2
3.12%
Yes

C+
26














Florida
-11.50%
22.80%
4.4
2.72%
Yes

B-
25














New Jersey
-15.80%
29.90%
3.7
1.18%
No

C-
23














Illinois
-10.90%
47.30%
3.5
1.44%
No

C-
22














Wisconsin
-11.20%
23.20%
4.4
0.96%
No

C+
22

This horrible news only underscores the fact that even though 70% of stimulus spending has gone to fill in Medicaid and state budget holes, our states are still in dire straits because state tax revenue is collapsing across the country.

State Tax Revs & Economic Changes

Unlike the federal government, states cannot run deficits, which means cascading revenue becomes cascading services and many, many cut state jobs. For those who resist another state bailout-type stimulus bill, they must recognize what that entails: hundreds of thousands of state employees joining the ranks of unemployment, and unemployment benefits. Q3 was great, but this thing isn't close to being over.

Update: The Center on Budget and Policy Priorities reports that states could cut almost a million jobs without US aid because of budget shortfalls.