Parting Thoughts

Now for Something Completely Different (Part II)

By J.D. Neeson, President, Marine Parts Express

Recently, while reading my dear wife’s AARP Bulletin Vol. 52, No. 4 (notice how I emphasize it was her copy), I saw a little report with some interesting numbers about state government debt. As always, it appears that the ongoing debate is focusing on the wrong issues. The chart below shows projected deficits as a percentage of budget for fiscal 2012 (I added which party controls the legislature—R for Republican, D for Democrat, S for divided, as of 2010 elections—to show there is plenty of blame to go around).

Ala., 13.9% R; Ariz., 11.5% R; Calif., 29.3% D; Colo., 13.8% S; Conn., 18.0% D; D.C., 5.2% S; Del., 6.3% D; Fla., 14.9% R; Ga., 7.9% R; Hawaii, 8.2% D; Idaho, 3.9% R; Ill., 14.6% D; Ind., 2.0% R; Iowa, 3.5% S; Kan., 8.8% R; Ky., 9.1% S; La., 20.7% S; Maine, 16.1% R; Mass., 5.7% D; Md., 10.7% D; Mich., 5.9% R; Minn., 23.6% R; Miss., 14.1% D; Mo., 9.1% D; Neb., 9.2% S; Nev., 45.2% D; N.H., 27.2% R; N.J., 37.4% D; N.M., 8.3% D; N.Y., 18.7% S; N.C., 12.7 R; Ohio, 11.0% R; Okla., 9.4% R; Ore., 25.0% S; Pa., 16.4% R; R.I., 11.3% D; S.C., 17.4% R; S.D., 10.9% R; Tenn., 9.4% R; Texas, 31.5% R; Utah, 8.2% R; Vt., 16.3% D; Va., 13.1% S; Wash., 16.2% D; Wis., 12.8% R

Note how the states with the highest percentages are not necessarily the ones that have the poorest economies or vice versa. It looks like (other than California) many of those states with the lowest income and sales tax rates are the ones in the most trouble. It also looks like neither party can brag too much about their fiscal prowess, although some of the Rocky Mountain states’ Republicans can feel a little proud.

On average, approximately 43% of state revenues come from general funds (state income and sales tax), 30% from the Federal Government, 25% from other taxes that the state gets a cut from (like gas or cigarette taxes or licenses, etc.) and only 2% from bonds. On average, approximately 22% of state spending is on Medicaid, 21% on public education, 10% on state higher education, 8% on transportation, 3% on corrections, 2% on public assistance and only 4% on pensions. The rest is spent on all sorts of programs (including debt service), with a discouraging amount falling under “administration.”

J.D. Neeson

Categories: Economy, JD Neeson

Tags: AARP, state government debt, state revenue

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