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Budget Woes May Be Good News For California Prisoners

Written By Brian Hicks

Posted July 24, 2009





It’s days like this that Arnold Schwarzenegger probably wishes he never left Austria and discovered steroids.

Faced with a $26 billion budget hole, the Governor has floated the idea of releasing 27,000 bad guys from prison to help close the gap.  

Of course, that ignores the fact that according to the stats 70% of early-release inmates were re-arrested within three years and 1 in 5 prisoners committed a violent crime after release.  

It does, however,  go to show you just how desperate the Golden State has become in the face of falling revenues.

Unfortunately, California it just the tip of the iceberg….

From the Financial Times by Nicole Bullock entitled: US state budgets hit by shrinking tax take

Sharply falling tax revenues across the US have left states facing fresh budget shortfalls and threatening further painful spending and service cuts following previous multiple rounds of belt-tightening.

In the first quarter of the calendar year, tax collections dropped by 11.7 per cent, the largest fall on record, according to the Rockefeller Institute of Government. Of 50 states, some 45 reported declines.

state tax

Early figures for April and May show an overall decline of nearly 20 per cent for total taxes, “a further dramatic worsening of fiscal conditions nationwide”, says the institute.

Billions of dollars of federal stimulus funds, combined with cuts to state employee jobs, school districts, healthcare and even the US prison system, have so far failed to close the budget gaps.

“The states are constantly trying to recalibrate their budgets to deal with a shrinking revenue base,” said Susan Urahn, managing director of state policy initiative at the Pew Center on the States.

It raises questions about how deep the decline in services may go, the direction of tax rates, and whether the federal stimulus measures are working.

“Clearly, states are enacting cuts in spending that are reducing aggregate demand and slowing down the recovery,” said Nicholas Johnson, director of the state fiscal project at the Center on Budget and Policy Priorities, a research group that focuses on fiscal policy and public programmes that affect low- and moderate-income families and individuals.  

The problems do not end there: nearly two-thirds of states are projecting budget gaps for 2011, when far less stimulus will be available, and at least 15 states are already projecting gaps as far out as 2012, when federal aid is minimal, the NCSL study shows.

“Lawmakers just close gaps and more open ahead of them,” said Corina Eckl, director of the fiscal affairs programme at the National Conference of State Legislatures, a bipartisan research group for the states. “We still have a long way ahead of us on these problems.”

Needless to say, Arnold has seen better days.

Any predictions on the first state to go bankrupt?

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