WTF !! WTF !! 46 STATES COULD FACE BANKRUPTCY IN 2009-2010 !!

[link to www.financialarmageddon.com]


February 28, 2009
Groundhog Day
In the 1993 comedy, Groundhog Day, Bill Murray plays an egocentric weatherman who suddenly finds himself condemned to repeating one of his least favorite days over and over again.

With municipal finances rapidly emerging as the next debacle-in-the-making in the still unfolding financial crisis, as noted by Adrienne Gonzalez in a post at her Jr Deputy Accountant blog, "46 States Could Face Bankruptcy in FY09/FY10," the bailout-meisters must be feeling like they, too, are stuck in an endlessly repeating nightmare -- only without the laughs.

According to the Center on Budget and Policy Priorities, California isn't the only state in fiscal hot water. In fact, 46 states could find themselves bankrupt and destitute by the end of fiscal year 2010.

States are currently at the mid-point of fiscal year 2009 — which started July 1 in most states — and are in the process of preparing their budgets for the next year. Over half the states had already cut spending, used reserves, or raised revenues in order to adopt a balanced budget for the current fiscal year — which started July 1 in most states. Now, their budgets have fallen out of balance again. New gaps of $51 billion (over 10% of state budgets) have opened up in the budgets of at least 42 states plus the District of Columbia. These budget gaps are in addition to the $48 billion shortfalls that these and other states faced as they adopted their budgets for the current fiscal year, bringing total gaps for the year to 15 percent of budgets.

The states fiscal problems are continuing into the next two years. At least 45 states have looked ahead and anticipate deficits for fiscal year 2010 and beyond. These gaps total almost $94 billion — 16 percent of budgets — for the 36 states that have estimated the size of these gaps and are likely to grow as gaps are re-estimated in the next few months.

TABLE 1:
STATES WITH MID-YEAR FY2009 BUDGET GAPS


Size of Gap
Percent of FY2009 General Fund

Alabama
$1.1 billion
12.7%

Alaska
$360 million
6.8%

Arizona
$1.6 billion
15.9%

California
$13.7 billion
13.6%

Colorado
$604 million
7.7%

Connecticut
$1.7 billion
10.1%

District of Columbia
$258 million
4.1%

Delaware
$226 million
6.2%

Florida
$2.3 billion
9.0%

Georgia
$2.2 billion
10.3%

Hawaii
$232 million
4.0%

Idaho
$218 million
7.4%

Illinois
$4.2 billion
14.8%

Indiana
$1.1 billion
8.0%

Iowa
$134 million
2.1%

Kansas
$186 million
2.9%

Kentucky
$456 million
4.9%

Louisiana
$341 million
3.7%

Maine
$140 million
4.6%

Maryland
$691 million
4.6%

Massachusetts
$2.4 billion
8.4%

Michigan
$200 million
0.9%

Minnesota
$426 million
2.5%

Mississippi
$175 million
3.4%

Missouri
$342 million
3.8%

Nevada
$536 million
7.3%

New Hampshire
$50 million
1.6%

New Jersey
$2.1 billion
6.5%

New Mexico
$454 million
7.5%

New York
$1.7 billion
3.0%

North Carolina
$2.0 billion
9.3%

Ohio
$1.2 billion
4.2%

Oregon
$442 million
6.6%

Pennsylvania
$2.3 billion
8.1%

Rhode Island
$372 million
11.4%

South Carolina
$871 million
12.7%

South Dakota
$27 million
2.2%

Tennessee
$884 million
7.8%

Utah
$620 million
10.4%

Vermont
$66 million
5.4%

Virginia
$1.1 billion
6.7%

Washington
$509 million
3.4%

Wisconsin
$594 million
4.2%

TOTAL
$51.1 billion
10.5%

Note: An entry of “DK” in Size of Gap means that an estimate of the size of the projected gap in that state is not yet available.