And you think NY has it bad ...
California Gov. Jerry Brown Credit: MCT/Hector Amezcua
If it's any comfort to New Yorkers upset by governmental red ink, fiscal troubles are breaking out in other states as well, and some of them are even worse than ours.
Illinois legislators just voted to raise the state's income tax by two-thirds and the corporate tax rate by nearly half, prompted by a budget deficit that could reach $15 billion - much higher, per capita, than New York's - and an $8 billion backlog of unpaid bills. Taxes were raised amid worries that vendors might stop doing business with the state, which has a huge unfunded pension liability, too. Legislators also approved a 2 percent cap on spending increases.
In California, which shares with Illinois the nation's lowest Moody's bond rating among states, Gov. Jerry Brown has proposed an austere new budget that would painfully slash $12.5 billion in spending while seeking $12 billion in increased revenue from extensions of taxes that are subject to voter approval. The goal is to close a budget gap estimated at $25 billion.
There are important differences between those states and New York. Not only are they in deeper financial trouble, but they had lower tax burdens. With taxes already at or near the nation's highest, New York's leaders have little room to raise them. We should look to Illinois and California as cautionary tales - and then get busy cutting. hN
