Déjà vu is a phrase borrowed from France to describe the odd feeling that an experience happened before. Often attributed to a dream, déjà vu is an odd experience leaving one with an odd, creepy feeling. Sadly, budget woes in California can’t be attributed to the feeling; they were supposedly patched up as recently as August. Here we go again! In 2011, California is facing a $14.4 billion budget gap.
Desparate Times…
The last years in California have seen income tax increases, currency printing, a joke of a budget compromise, and even a stealth withholding increase. The withholding increase is especially annoying: California left their tax rates the same as before, just increased the amount they receive per paycheck. If it doesn’t get rolled back when times are good and interest rates creep higher, California will pocket a good amount on the float from holding onto California workers’ money. But I digress… the point is, California is already the state with the 6th highest tax burden, according to the Tax Foundation.
California also isn’t the only state with budget issues in the CNN article linked in the introduction. Illinois, New Jersey, New York and Florida all have their hands out. Among the five states, there is a predicted $46.7 billion deficit in 2011. Not bad for 10% of our nation’s states. Also, it’s hard to argue the states don’t have high enough tax rates. Again according to the Tax Foundation, the states feature the following tax burdens:
- California – 6th
- Florida – 47th
- Illinois – 30th
- New Jersey – 1st
- New York – 2nd
- Population by State, Wikipedia Data
As you can see, all over the map. However, the fact that New Jersey has the highest tax burden and also the fewest people from the list sticks out like a poor thumb. In fact, it’s interesting to see how the deficit breaks down per capita (using these population estimates and the CNN deficit estimates for fiscal year 2011):
- California – $389.60
- Florida – $253.53
- Illinois – $991.45
- New Jersey – $918.72
- New York – $347.98
- Deficit Per Capita 2011 Fiscal Year, CNN/Wikipedia Data
It looks like some states are worse off than California, after all. In fact, the only state of the five largest by population that didn’t make the list was Texas (second largest). New Jersey is the 11th largest state.
Anyway, this post was meant to be more illustrative than anything. Recognize that states are hurting, and the hurting will continue for a little while yet. Get ready for service cuts and tax increases (or both!) as states recover from the recession hangover.
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