Nine States Suffer Californian Fiscal Disease

Publication: Financial Times

Author: Nicole Bullock

11/11/2009 - Some of the same financial troubles that have pushed California toward economic disaster are wreaking havoc in nine other states and posing a threat to the nascent recovery, according to research released on Wednesday.

“California’s fiscal problems are in a league of their own,” says Susan Urahn, managing director of the Pew Center on the States, which conducted the research, “but the Golden State is hardly alone.”

Arizona, Florida, Illinois, Michigan, Nevada, New Jersey, Oregon, Rhode Island and Wisconsin join California as the most troubled U.S. states, the Pew Center says.

For residents, fiscal problems have meant higher taxes, layoffs of state workers, longer waits for public services, more crowded classrooms and less support for the poor. They also may hurt the national economy, since the 10 states account for more than a third of the U.S. population and economic output, the report says. Tax increases and spending cuts, the main ways of balancing state budgets after sharp declines in tax revenue, can slow the overall recovery.

Read the full article Nine States Suffer Californian Fiscal Disease on the Financial Times' Web site.

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