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Declining tax revenue cripples states

The country is pulling out of the Great Recession, but an Associated Press review of 50 balance sheets shows state budgets ravaged by declining tax revenue and bank accounts far leaner than they were when the downturn took hold.

Many face massive liabilities for years to come. Budget and other fiscal data compiled by the AP show that across the 50 states, the $734 billion in cumulative revenue available for the coming fiscal year has dropped by about $34 billion, or 5 percent, from the 2007-08 fiscal year, when the recession began.

Some states are in far worse shape. New Jersey, Nevada, Oregon, Illinois and Louisiana reported deficits that are more than 20 percent of their state's general fund.

States that accepted and spent one-time outlays of stimulus money also are bracing for the absence of that windfall this year and are weighed down by enormous pension and retiree health care obligations.

Some of the details:

• Tax revenue in Arizona, hit hard by the housing collapse, remains 19 percent below 2007 levels, the largest difference among the states. Next are California and Florida at 18 percent, and Michigan and Tennessee at 17 percent.

• Florida has fewer Medicaid recipients per 1,000 residents. Its 142 Medicaid recipients compare favorably with Maine (300), New Mexico (269), Texas (259) and New York (244).

• Seven states are spending 10 percent or more of their general funds to pay for their prison systems. Florida's share is at 10 percent.

• The average general fund amount dedicated to colleges and universities was 11.6 percent. For Florida, it was 12 percent.

• All 50 states have a combined $689.5 billion in unfunded pension liabilities and $418 billion in retiree health care obligations. Five states have unfunded public employee pension liabilities of $50 billion or more.

David Wyss, chief economist at Standard & Poor's in New York, called the pension debt "the biggest headwind that the states will be fighting against" as they try to climb out of budget holes.

Florida highlights

• $28.1 billion general fund, 2007-08

• $23.1 billion general fund, 2010-11

• $16.7 billion unfunded pension liability

• $4.5 billion health care liability for retirees

• 142 Medicaid recipients per 1,000 residents

• 7 percent debt as percentage of general fund

Broken budgets

For a look at the 50 states' budget and fiscal data, and the financial difficulties facing them, please go to

Declining tax revenue cripples states 06/13/11 [Last modified: Monday, June 13, 2011 11:22pm]
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