The national jobless rate has reached its lowest level in eight years. Home sales have reached their strongest level since 2006. Even the U.S. budget deficit is narrowing, to a respectable $439 billion.
Overall, the state of the nation’s economy is is fairly healthy. But for individual states? Not so much.
A few examples: Louisiana is laying off 30,000 state employees and cutting social programs. Illinois is stuck in the middle of partisan battles over how to close a $5 billion budget deficit that’s caused the state to stop paying social-service providers, which have in turn slashed services. Governor Sam Brownback of Kansas is cutting spending on state universities even as courts say he slashed K-12 funding to unacceptable levels, leaving schools in poor and minority areas underfunded. North Dakota—one of the few states that saw a budget surplus during the Great Recession—is cutting agency budgets and dipping into its rainy-day fund. In December, Oklahoma declared a “revenue failure,” which means the state failed to bring in as much money as it had planned for and thus had to cut spending. And Alaska—one of the most conservative states in the union—is thinking about implementing an income tax for the first time in 35 years to help close its $3.6-billion budget deficit.
Why are these states having so many problems at a time when the country’s economy as a whole finally seems to be on more stable footing?
The oil market definitely plays a role. As the price of oil and gas has continued to fall, drilling has slowed and the revenues states can collect from oil and gas royalties shrink. Some of the states with the biggest budget problems, including Alaska, Louisiana, and Oklahoma, depend on taxes from oil and gas extraction (around 85 percent of Alaska’s general-fund revenues are supported by oil). But other states that make a lot of money from oil—like Texas—are doing fine, and states like Illinois and Kansas are plagued by budget problems, but aren’t dependent on oil at all.