In a previous post regarding the financial condition of the US, I mentioned that for the time being I would not consider state issues. This post is a little detour.
The state of Illinois has an estimated $13bn deficit. That number is one-half of the revenues that the state brings in. Of course the revenues of $27bn is also an estimate for this year. Furthermore, the pension systems are underfunded to the tune of $62bn. In one county, the sheriff's patrol cars have been repossessed.
There is no way that Illinois can recover without federal aid. But that is only Illinois, what about California? New York? For example, California faces a $20bn deficit. And that is for the current fiscal year. Next fiscal year, 2010, the shortfall is predicted to be $40bn.
As reported by The Telegraph, according to the Economic Policy Institute states face a shortfall of $156bn in fiscal 2010. In any case, the federal government can only subsidize the states for a limited period of time. So while the President and Congress fiddle with health care and wars, Rome is burning.
http://online.wsj.com/article/SB10001424052748703795004575087733732827118.html
http://www.telegraph.co.uk/finance/comment/ambroseevans_pritchard/7338857/Dont-go-wobbly-on-us-now-Ben-Bernanke.html
http://sunshinereview.org/index.php/State_budget_issues,_2009-2010
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