California is a case study in mismanagement of state government finances, a new report from the Pew Center on the States says, but nine other states could be following the same path to virtual insolvency.
The report, released today and entitled "Beyond California: States in Fiscal Peril," cites Arizona, Rhode Island, Michigan, Oregon, Nevada, Florida, New Jersey, Illinois and Wisconsin as states with budget problems similar to California. Pew's Web site on the report invites readers to compare their own states to California.
"They share important characteristics with California, but they may not be destined to follow in the Golden State's footsteps," Pew says. "Some states in this report already have responded aggressively to their budget crisis, although it is too soon to tell whether their actions will put them on solid fiscal footing."
Much of the report focuses on how California came to face multi-billion-dollar deficits for much of this decade. " Adding annually to the budget problems," it says, "California lawmakers since the late 1990s have increased spending by more than the rise in state population or inflation. In the meantime, policymakers rarely set aside in the rainy day fund the 5 percent of general funds permitted by law, giving the state less of a cushion during lean times."
Despite enacting billions of dollars in temporary taxes, cutting spending on schools and other programs and enacting a series of bookkeeping gimmicks, the state faces a nearly $21 billion deficit in the remainder of the current fiscal year and all of the next and ongoing annual shortfalls in the $20 billion range after that, according to a recent report by the Legislature's budget analyst, Mac Taylor.
The full Pew report is available here.
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