11/17/2010 - The U.S. government is now borrowing $5 billion every business day and has done nothing more than talk about a plan to reduce its debt. State governments don't have that luxury.
From Sacramento to Austin to Albany, the day of fiscal reckoning is here. At one point this spring, financial markets were demanding more to insure investors against defaults by Illinois, New Jersey, New York and Michigan than to insure the debt of Ireland and Portugal, the flailing economies of Europe.
Tolerance for state tax increases may be fading. Twelve of the newly elected governors—11 Republicans plus New York Democrat Andrew Cuomo—have ruled out tax hikes to cure deficits, according to a tally by Stateline.org, a website published by the Pew Center on the States. In Washington state, voters recently undid higher taxes on candy, bottled water and soda that the legislature had enacted, and they rejected a proposed income tax that would have hit only high-wage earners.
Read the article States Offer Washington Lesson in Belt Tightening on the Wall Street Journal Web site.