by Bruno Korschek

Created on: February 13, 2011

Fascinating, if depressing, analysis in the February 11, 2011 issue of The Week magazine regarding the dire economic straits of our state governments.  As a word of caution, please do not read the following if you have a weak stomach or you actually think the economy is going to get very healthy in the next few years (it is not):

- According to the Illinois state comptroller, Illinois is basically a "deadbeat state" that had to raise its personal income tax rates 66% and has simply stopped paying the money it had previously committed to schools and a host of other creditors. The Week had reported in 2010 that bullet suppliers to Illinois law enforcement agencies had stopped shipping them bullets because the state government had not paid its outstanding bullet bills.

- California is issuing nonredeemable IOUs in an attempt to keep its creditors at bay.

- Arizona has sold off its state House and Senate buildings, obviously a one time, desperate grab for cash.

- Arizona's state Medicaid fund has stopped covering organ transplants.
Camden, New Jersey, the second most dangerous city in America, just laid off 167 of its 373 police officers.

- The National Association Of State Budget officers expects state tax receipts to fall off 6.5% below 2008 levels and it estimates that it could be up to five years before tax receipts recover to 2008 levels.

- Despite this fall off in revenue, Medicaid and state employee pension obligations will continue to rise under contracts signed when the economy was healthier. Thus, if overall revenues go down, Medicaid and state employee pensions go up, in all likelihood schools, roads, bridges, social support programs, etc. will receive less and less money over time.

- One social program that is already in deep trouble is the money used by state and local governments to bury indigent people who have passed away. For example, in Wayne County, Michigan, the county that includes Detroit, the local government finances are so bad and short that the local coroner cannot afford to bury 185 bodies and has to just store them in a vault. Some of the bodies have been there for over two years, with no sign that funds will be available soon to bury them.

- Federal stimulus money, which had been delaying the pain of revenue shortfalls, are almost all used up.

- All but ten states are expected to post deficits this year requiring budget cuts or tax hikes to get back in balance.

- In total, all states are expected to be about $140 billion short

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