By: Karen Warnick, The Independent
11/17/2009

Even as some economists are predicting an end to the recession, a report by the Pew Center on the states released Nov. 11 warns 10 states are heading towards economic disaster that could affect the rest of the country.

The report warns those states need to take drastic action to fix their economic problems or face even higher taxes, more layoffs, more crowded classrooms and fewer services.
The 10 states, in order of worst to least, are California, Arizona, Rhode Island, Michigan, Oregon, Nevada, Florida, New Jersey, Illinois and Wisconsin. The states in the best fiscal shape are Wyoming, Iowa, Nebraska, Montana, Texas and North Dakota.
These 10 states account for more than a third of America's population and economic output, according to the report.
The Pew Center compiled its list by scoring all 50 states using six factors: high foreclosure rates, increasing joblessness, loss of state revenues, the relative size of budget gaps, legal obstacles to balanced budgets and poor money-management policies and practices.
The report's summary of Arizona indicates the state depends heavily on a growing economy to bring in tax revenue, lawmakers don't have a lot of leeway to address budget deficits, thanks to voter-imposed spending constraints, and lawmakers relied on one-time fixes to balance its budget instead of making long-term changes.
In 2007, Arizona was the second-fastest growing state. Since 2000, the population jumped by more than 25 percent. In September of this year, the state became the first to lose 10 percent of its workforce, even surpassing Michigan, says the report.
Arizona's top three revenue generating taxes - corporate income, personal income and sales tax - dropped more than 21 percent in fiscal year 2009.
Stimulus funds from the federal government plugged some of those holes but the economic downturn is greater than officials expected when the Recovery Act was passed in February. Those stimulus funds are expected to run out in 2010 and 2011, which could cause further hardship for states.
The report says state economies usually take up to two years longer to recover after the nation as whole begins to improve.
The Pew report can be read at www.pewcenteronthestates.org/initiatives_detail.aspx?initiativeID=55888 .

*Reach the reporter at kaykay85901@yahoo.com

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