Study: Midwest states in fiscal peril could damage hopes of U.S. economic recovery
CHICAGO — A report released yesterday by the Pew Center on the States names three of the five states in the Midwest Democracy Network region – Illinois, Michigan and Wisconsin – among the 10 most economically troubled states in the nation.
The report, “Beyond California: States in Fiscal Peril,” contends that some of the same pressures that have pushed California toward economic disaster are wreaking havoc in a number of other states, with potentially damaging consequences for the entire country. Other states singled out are Arizona, Florida, Nevada, New Jersey, Oregon and Rhode Island.
According to the Pew Center, these states’ budget troubles can have significant repercussions for their residents: higher taxes or fees; layoffs or furloughs of state workers; longer waits for public services; more crowded classrooms; higher college tuition and less support for the poor or unemployed. They also pose challenges for the nation as a whole.
Together, the 10 states account for more than one-third of America’s population and economic output. And actions taken by state governments to balance their budgets – such as tax increases and drastic spending cuts – can slow down the country’s recovery.
Illinois is highlighted as having one of the worst budget gaps in the country at $13.2 billion.
Michigan is pointed out as never recovering from a 2001 recession and trying to solve problem on a 1960s-sized budget.
Wisconsin is emphasized for a historical pattern of borrowing frequently to cover operating expenses:
The partner groups in Midwest Democracy Network’s alliance of political reform and civic education organizations are working for a political system that will, among other goals, create a healthy economy. “A healthy economy depends on a healthy democracy,” said MDN’s Executive Director Leah Rush. “Open and honest government is a critical piece needed for our states to solve their economic puzzles.”
For the study, Pew’s researchers identified factors that have contributed significantly to California’s difficulties, then determined the degree to which other states are experiencing the same challenges. These factors are: (1) loss of state revenues; (2) the relative size of budget gaps; (3) increasing joblessness; (4) high foreclosure rates; (5) legal obstacles to balanced budgets—specifically, a supermajority requirement for tax increases or budget bills and (6) poor money-management practices. Pew scored all 50 states using the best available data as of July 31, 2009.
The Midwest Democracy Network is an alliance of political reform advocates committed to improving democracy in Illinois, Michigan, Minnesota, Ohio and Wisconsin. The Network includes state-based civic and public interest organizations, as well as prominent academic institutions and respected policy and legal experts. The Network addresses the interconnectivity of political policies with a holistic reform agenda. Priorities include: campaign finance, election law and voting rights, judicial independence, media reform, open and ethical government, and redistricting.
More about the report:
- Read the Pew Center news release.
- Check out the summaries about the 10 most troubled states.
- Go to the report website.
