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The state of things
Two separate reports out today paint a very dark picture for state budgets. One of them says without more federal stimulus money, states could bleed almost a million new jobs next year.
Presuming they will get no more fiscal relief, states will have to take steps to eliminate deficits for state fiscal year 2011 that will likely take nearly a full percentage point off the Gross Domestic Product. That, in turn, could cost the economy 900,000 jobs next year. Mark Zandi, Chief Economist of Moody’s Economy.com, recently warned that these state budgetary actions “will be a serious drag on the economy at just the wrong time.”
The 10 most troubled states are: Arizona, California, Florida, Illinois, Michigan, Nevada, New Jersey, Oregon, Rhode Island and Wisconsin.
Other states — including Colorado, Georgia, Kentucky, New York and Hawaii — were not far behind.
The list is based on several factors, including the loss of state revenue, size of budget gaps, unemployment and foreclosure rates, poor money management practices, and state laws governing the passage of budgets.
So, in light of all the money that’s gone to corporations during this recession and considering the economy’s fragile condition, do states deserve more help? Or do they simply need to bite the bullet and cut, even if that means job losses?