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States’ Budget Woes Threaten Broad Economic Recovery

With the national economy beginning to see glimmers of a comeback, the budget woes of at least 10 states threaten to derail a broad economic recovery. Gwen Ifill reports.

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    By now, you have likely seen plenty of stories and headlines, including on this program, about California's deep budget troubles and the consequences. But a new report finds the Golden State is hardly alone. Nine other states are also in a budget fix.

    Rhode Island, New Jersey, Florida, Michigan, Wisconsin, Illinois, Arizona, Nevada, and Oregon all face potential layoffs, tax increases and cuts in services in coming months.

    The Pew Center on the States pinpoints several key factors: high foreclosure rates, growing unemployment and loss of revenues brought on by the national recession, poor money management and resistance to new taxes from state lawmakers and voters. To tell us more about what's happening, we turn to the report's lead author, Susan Urahn, managing director of the Pew Center on States, and, from Nevada, Jon Ralston, columnist for The Las Vegas Sun. I will start with you, Susan Urahn. How deep does this go?


    Well, I think the — the question that we asked was, if you look behind California, really, how bad is it out there? And we found that several states are struggling with many of the same problems that California has, and that, as they come into the next budget year — which they're beginning to put together budgets now — and the year after, they're going to be facing many of the same problems they faced last year. So, the headlines we saw last year in California were also being — being played out in several other states. We're going to see them again.


    I want to talk a little bit about what is the reason for all of this bad news. Is it the economy? Is it the national recession? Or is there some measure of politics involved in the decision-making at the state level as well?


    Well, it's a little bit of all three. And I think what is — what is really striking about all the states we looked at is — is, in part, how different they all are, different parts of the country, different tax structures, different political structures. I think that, certainly, the — the economy is playing a key role. Several of these states were hard-hit by the housing crisis, by the collapse of the financial structures. So, there is that.

    I think the political structures come into play in some states where they have, say, a supermajority requirement to pass tax increases or a budget. And I think Nevada is a terrific example of — of some of those challenges. It just — it, in some cases, limits the kind of solutions that states can put on the table.

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