States of budgetary collapse

Cecelia wrote:

I think a real problem is the states that give more to the feds in tax money than they get back.

That's true of some but not all of the states in red. California, Nevada, New York, Connecticut, New Jersey, Illinois and Wisconsin all do contribute more to the federal treasury than they get back in services (Nevada and New Jersey each get less that $.70 on the dollar)

But there are beneficiaries of federal largesse that are also in trouble. Arizona, Alaska, North Carolina and Vermont actually get more back than they put in, while Florida is reasonably close to par.

Generally speaking, the big "welfare" states tend to be in the South (which is the only region that takes in more than it hands out as a whole), although naturally there are exceptions (Alaska, New Mexico, Montana, Hawaii and Maine all get above $1.40 back on the dollar).

What we might see over time is that these imbalances get rectified a little bit if the Democrats stay in charge for a while (and start rewarding their constituents). But for the most part, these things aren't likely to change too much. Much of the imbalance, for example, is caused by retirees moving south to warmer climates and collecting Social Security and Medicare benefits there. Another factor is the southern weighting of major military bases, and that's not likely to change much either.

There are also some other big reasons for why there might be big problems in many of these states. For example, California, Nevada, Arizona and Florida were all hurt hard by the real estate meltdown.

Alaska's state revenues are heavily, heavily dependent on the price of oil (which is why it's so easy to be a popular governor when it's selling for $140 a barrel)

New York, New Jersey and Connecticut have been hurt by falling employment and salaries on Wall Street, which has taken a big bite out of revenues.

In short, there are a number of reasons why state governments might end up in trouble, some due to national factors, some due to local circumstances, and, yes, some due to inept state legislatures. No doubt many of the worst-hit states (like California) suffer from all three.

To Cecelia:

You are right that certain states send less to the Feds than they get back (Arizona - my state - being a prime example), but you neglect to mention that the majority of many of these states are actually owned by the Federal Government. This is very common out here in the West.

In Arizona, when you remove federal owned lands and Indian territories, we actually pay more in federal taxes per square mile of state owned land than we get back. It's a very important difference.

While we 'get' more back from the Feds the money goes to keeping up the National Parks, federal territories, Indian tribal lands, etc., that make up the majority of Arizona.

Thus, the money that comes back in to the state doesn't really go into the general fund as much as it goes in to maintaining these federal expenses.

Thus, we have less land that is taxable and more federal costs since the majority of the state is federal land. It's an unfortunate two way street.

In a word, ridiculous. I mean, what else do you want us to say? They're bickering over tiny amounts of revenue, and it all amounts to posturing in advance of next year's elections. As for the decision to kill the tax on arts events, good for them! That was a really bad idea and I hope it stays in the morgue.