California, Oregon and Nevada Top List of States in Biggest Financial Trouble

It might not come as a surprise that California appeared on the Pew Center on the States’ list of the states in the worst financial trouble. But there are other states on the list that you might not have expected to see:

“All of California’s neighbors — Arizona, Nevada and Oregon — and fellow Sun Belt state Florida were severely hit by the bursting housing bubble, landing them on Pew’s list of states facing fiscal difficulties similar to California’s. A Midwestern cluster of states comprising Illinois, Michigan and Wisconsin emerged, too, as did the Northeastern states of New Jersey and Rhode Island.”

Pew listed some other states in financial trouble [PDF]:

“Close behind the 10 states on our list were states such as Colorado, Georgia, Kentucky, New
York and Hawaii. . . . New York’s revenue decline, for example, was steeper in the first quarter of 2009 than in all but four states, and its fiscal year 2010 budget gap was sixth-worst in the nation. In fact, all but two states, Montana and North Dakota, confronted budget shortfalls for fiscal year 2010, with some facing their largest deficits in modern history.”

The study looked at six factors:

  • High foreclosure rates
  • Increasing joblessness
  • Loss of state revenues
  • The relative size of budget gaps
  • Legal obstacles to balanced budgets — “specifically, a supermajority requirement for some or all tax increases or budget bills.”
  • Poor money-management practices

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