10 States Most Unprepared for This Deep Recession

Most state budgets are in better shape now than they were before the last recession, thanks to steady growth in employment and the resulting rise in tax revenue.

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Most state budgets are in better shape now than they were before the last recession, thanks to steady growth in employment and the resulting rise in tax revenue. Many states had been socking away cash in rainy-day funds, and about half of all states had enough on hand to tide them over in a typical downturn, such as the 2001 tech bust.

But this is no typical downturn: Indeed, a brutal recession is already upon us, and many states will struggle. The most vulnerable states have little savings, or they stand to see revenues fall steeply because they depend heavily on either income taxes or levies on energy production to fund their budgets.

These 10 states will have to either raise taxes or cut spending by more than 4% -- maybe much more. Is your state on the list? Take a look.

Reserve, revenue and budget data are from the National Association of State Budget Officers. Recession impact on state revenues calculated by Moody’s Analytics.

David Payne
Staff Economist, The Kiplinger Letter
David is both staff economist and reporter for The Kiplinger Letter, overseeing Kiplinger forecasts for the U.S. and world economies. Previously, he was senior principal economist in the Center for Forecasting and Modeling at IHS/GlobalInsight, and an economist in the Chief Economist's Office of the U.S. Department of Commerce. David has co-written weekly reports on economic conditions since 1992, and has forecasted GDP and its components since 1995, beating the Blue Chip Indicators forecasts two-thirds of the time. David is a Certified Business Economist as recognized by the National Association for Business Economics. He has two master's degrees and is ABD in economics from the University of North Carolina at Chapel Hill.