State governments have budget problems that are unique to them. Unlike Uncle Sam, states cannot print money. Yet, their political overseers have the same bad habits of spending too much.
One major example: Expensive pensions, especially when they are not properly funded, if funded at all
These recession days, states’ tax revenues are lower which make their financial burdens even more onerous. Business tax incentives have not worked out and Income taxes on business and individuals are too high for them to be easily raised. It is becoming more difficult to keep looking for this source of easy state revenue.
The solution? States will have to cut back much of what they are now offering, and begin tightening their belts. This includes resisting federal mandates that require spending by edict from Washington.
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