States in Fiscal Distress

The economic recession has taken a large toll on jobs, savings, businesses, and the federal deficit. Severe fiscal problems in the states are another by-product of difficult economic times.

Declines in state revenue have produced over $250 billion in budget deficits across the states. A new report by the Pew Center on the States (see www.pewcenteronthestates.org) finds that (1) many states will continue to face deficits through 2012; (2) financial pressure on states is placing further burdens on fiscally strapped municipalities; and (3) in the current fiscal year alone, states have increased taxes by $24 billion and cut services by $54 billion.

The study identifies the 10 states that are fiscally most vulnerable: Arizona, California, Florida, Illinois, Michigan, Nevada, New Jersey, Oregon, Rhode Island, and Wisconsin.

Have your students use the Pew Center web site to see where their state stacks up. The rich data profile of the states provides plenty of information for a good class discussion of both federalism and state governments.