State Budgets in Trouble

Home values, retirement accounts, and institutional endowments aren't the only things heading south in the current economic climate. According to the Center on Budget and Policy Priorities, a nonpartisan policy think tank in Washington, D.C., the credit crunch has contributed to new gaps in the budgets of at least fifteen states and the District of Columbia just two months after those states struggled to close the largest budget shortfalls seen since the recession of 2001. Because states are required to adopt a balanced budget going into a fiscal year (which starts July 1 for most states), the additional shortfalls will force states to cut spending, use reserves, and/or raise revenues over the coming months.

(Image courtesy Center on Budget and Policy Priorities)

The fifteen states facing additional shortfalls are:

California
Budget gap (as a % of the total budget): 22%
Gap: $22.2 billion

Arizona
Budget gap (as a % of the total budget): 19.9%
Gap: $2 billion

Florida
Budget gap (as a % of the total budget): 19.9%
Gap: $5.1 billion

Nevada
Budget gap (as a % of the total budget): 16%
Gap: $1.2 billion

Rhode Island
Budget gap (as a % of the total budget): 13.1%
Gap: $430 million

New York
Budget gap (as a % of the total budget): 9.8%
Gap: $5.5 billion

Alabama
Budget gap (as a % of the total budget): 9.5%
Gap: $784 million

Georgia
Budget gap (as a % of the total budget): 8.7%
Gap: $1.8 billion

New Jersey
Budget gap (as a % of the total budget): 7.7%
Gap: $2.5 billion

Maryland
Budget gap (as a % of the total budget): 7.2%
Gap: $1.1 billion

Virginia
Budget gap (as a % of the total budget): 7.1%
Gap: $1.2 bil

Vermont
Budget gap (as a % of the total budget): 6.8%
Gap: $83 million

New Hampshire
Budget gap (as a % of the total budget): 6.4%
Gap: $200 million

Illinois
Budget gap (as a % of the total budget): 6.3%
Gap: $1.8 billion

Delaware
Budget gap (as a % of the total budget): 6%
Gap: $217 million

South Carolina
Budget gap (as a % of the total budget): 5.7%
Gap: $390 million

Iowa
Budget gap (as a % of the total budget): 5.5%
Gap: $350 million

Minnesota
Budget gap (as a % of the total budget): 5.4%
Gap: $935 million

Michigan
Budget gap (as a % of the total budget): 4.8%
Gap: $472 million

Wisconsin
Budget gap (as a % of the total budget): 4.6%
Gap: $527 million

District of Columbia
Budget gap (as a % of the total budget): 2.1%
Gap: $131 million

(Source: CBPP, BusinessWeek)

Fasten your seat belts, everyone. We're in for a bumpy ride.

-- Mitch Nauffts