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Bernard Madoff, convicted of running an $65 billion Ponzi scheme, was sentenced to 150 years in jail. What’s your take on his punishment?
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Stateline.org, a nonprofit organization financed by the Pew Charitable Trusts, tracks policy, political, fiscal and legal developments at the state level in all 50 states. It publishes every weekday. Stephen C. Fehr is a Stateline staff writer.
Economic downturns are always difficult for states, which generally don't have the luxury the federal government has of running budget deficits. Since people are losing jobs and cutting back on spending, revenue drops sharply at the same time that demands soar on state health, nutrition and other safety net programs. But the credit crisis has added a nasty twist state governments have not had to cope with before -- difficulty in borrowing money.
The usual sources of short-term loans are drying up, forcing states to pay interest rates up an astonishing 7 or 8 points above the usual 1.5%-2% or to simply do without for now, says Stateline.org, a public interest news Web site. That's forcing many states to cut services and lay off state employees. The governor of Virginia cut his own salary.
Some short-term help may be on the way. State officials are asking to be allowed to join a new Federal Reserve program that buys commercial paper from businesses having trouble selling the short-term instruments. "Officials also are discussing ways the federal government could guarantee the sale of states' short-term bonds despite Internal Revenue Service restrictions against federal guarantees of tax-exempt financial instruments," Stateline says.
Some badly needed long-term projects are in doubt, too. And that could have an impact on economic recovery down the road since jobs would be lost and efforts to address the energy crisis and shore up aging infrastructure would slow. "Iowa wants to issue $183 million in bonds in November that, among other things, would finance expansion of a state prison and construction of a state office building. Oregon is planning bond sales in the coming months for projects to make state universities more energy-efficient and to extend a light-rail line in the Portland area. Missouri wants to issue bonds to finance a $700-million program to improve 802 of its worst bridges by 2012," Stateline says.
POSTED BY: Jack Norris (October 14, 2008 10:19 AM)
If I use a credit card to pay for routine expenses (actually use the credit line), it's safe to say that I'm living beyond my means.
We can't spend more than we're taking in for too long; are the states any different?
If the latest fiasco hasn't gotten everyone's undivided financial attention, we're well on our way to becoming a third world nation.
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