Ten states are facing imminent bankruptcy, confounding any possibility of economic recovery as tax revenues continue to decline and unemployment increases nationwide, Jerome Corsi’s Red Alert reports.
Those states in fiscal peril include California, Arizona, Rhode Island, Michigan, Oregon, Nevada, Florida, New Jersey, Illinois and Wisconsin. The surge in looming bankruptcies among state governments is accompanied by a surge in the number of Americans filing for personal bankruptcy – further indicators the economy has a long way to go before an economic recovery is a reality in Middle America, Corsi explained.
The 10 states, accounting for approximately one-third of the U.S. population, face declines in tax revenue as unemployment now officially tops 10 percent and budget gaps that mean higher taxes loom in the future. State government officials have been laid off, key social services including prisons and police are strained and schools have been closed.
Corsi wrote that most states, unlike the federal government, are constrained by state laws to balance their budgets, meaning revenue shortfalls must result in reductions in state government-financed programs. At the same time, the American Bankruptcy Institute reported personal bankruptcies surged 9 percent in October, with a 7 percent jump in business bankruptcies. Total bankruptcies in 2009 are expected to top 1.4 million, an increase of 30 percent from last year and the highest level since 2005, according to CNN Money.
The National Governors Association has reported state revenues across the nation were down 11.7 and 16.6 percent in the first two quarters of 2009, respectively.
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