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More Bad News For States: State Revenue Plunges By 31% In 2009 To $1.1 Trillion As Spending Increases
The Meredith Whitney "ubiquitous state default" case may have just gotten another leg up. According to just released Census Bureau data, in 2009 total state revenue plunged by 31%, from $1.6 trillion to $1.1 trillion. "The large decrease in total revenue was mainly caused by the substantial decrease in social insurance trust revenue. Social insurance trust revenue is made up of four categories — public
employee retirement, unemployment compensation, workers compensation
and other insurance trusts (i.e., Social Security, Medicare, veteran's
life insurance)." But the drop in the top line did not stop states from spending more: in the same year, state government spending rose by 3%, while that pervasive source of backstop funding, the US government, saw its grants to states increase by 13% to $477.7 billion. At this point it is safe to say nobody believes there is a deficit that the US government can not fill.
Full press release:
U.S. Census Bureau Reports State Government Revenues Decline Nearly 31 Percent
Total state government revenue dropped to $1.1 trillion in 2009, a decline of 30.8 percent from $1.6 trillion in 2008, according to the latest findings from the U.S. Census Bureau. The large decrease in total revenue was mainly caused by the substantial decrease in social insurance trust revenue.
Social insurance trust revenue is made up of four categories — public employee retirement, unemployment compensation, workers compensation and other insurance trusts (i.e., Social Security, Medicare, veteran's life insurance). More details on the social insurance trust revenue will be available from the 2009 Annual Survey of State Government Employee Retirement Systems data later this winter.
State governments received nearly $1.5 trillion in general revenues in 2009, a decrease of 1.4 percent from 2008. General revenue does not include utility, liquor store or insurance trust revenue.
Total taxes collected in 2009 ($715.1 billion), which accounted for 47.9 percent of general revenue, fell by 8.5 percent from $781.6 billion in 2008. This is the first year-to-year decline in tax revenue since 2002. Federal grants ($477.7 billion) increased 12.9 percent from 2008 to 2009 and accounted for nearly one-third of general revenue.
“The annual survey began in 1951, and every year since has provided state governments with a complete look at their fiscal condition and how their financial activities stack up against other states,” said Lisa Blumerman, chief of the Census Bureau's Governments Division.
These findings come from the 2009 Annual Survey of State Government Finances, which reports revenues, expenditures, debt, and cash and security holdings for each state as well as a national summary.
While tax revenue declined substantially, total federal grants to states increased 12.9 percent to $477.7 billion. Federal grants for welfare programs made up 59.3 percent of all federal grants received in 2009 and increased 16.3 percent to $283.3 billion over 2008, compared with only 4.3 and 4.0 percent year-to-year increases in 2008 and 2007, respectively. The accompanying table shows total federal revenue, federal revenue for welfare, and associated ratios for all 50 states for 2009 and 2008. (See table.)
General expenditures by state governments rose 3.0 percent in 2009 over 2008. These expenditures totaled more than $1.5 trillion, with expenditures for education ($562.1 billion), public welfare ($437.5 billion) and health and hospitals ($119.1 billion) representing the top three activities.
State government spending on education totaled more than 40 percent of general expenditures in 15 states led by Georgia (46.1 percent), Utah (45.6 percent) and Alabama (45.3 percent).
State government spending on public welfare was greater than 30 percent of general expenditures in 11 states, led by Minnesota (37.5 percent), Rhode Island (36.5 percent) and Maine (36.1 percent).
The leading states in spending for highways, as a percentage of general expenditures, were Alaska (13.5 percent), North Dakota (13.4 percent) and South Dakota (12.9 percent).
Hawaii (12.3 percent) led the states in spending on public health and hospitals as a percentage of general expenditures, followed by Connecticut (11.4 percent) and Virginia (10.9 percent).
For the 42 states with lotteries, ticket sales totaled $52.3 billion in 2009, compared with $52.7 billion in 2008. Lottery prizes awarded totaled $32.2 billion, and lottery proceeds were $17.7 billion. The top three states in lottery ticket sales were New York ($6.8 billion), Massachusetts ($4.2 billion) and Florida ($3.7 billion). The same states also ranked highest in prizes awarded; New York awarded ($4.0 billion), Massachusetts ($3.2 billion) and Florida ($2.3 billion).
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Prichard, Alabama offers some clues about the way forward.
North Dakota and Alaska!
The Power of the Parasite Class:
http://www.youtube.com/watch?v=L8zmKsaA6jA&NR=1
The sunset of the State:
http://www.youtube.com/watch?v=sLCEXtpTNYU
With the top spot in hand, I will take one, but only one, more shot at self-serving promotion. It discusses, among other things, state and municipal finance...
http://forums.wallstreetexaminer.com/topic/921049-2010-year-in-review/
Promise: that's it.
Good stuff Thomas. I enjoyed reading it. Thanks.
Yes thank you for sharing.
Why on Earth would it take a whole year to get this data out? This seems like something that would be compiled by the individual states in real time.
I agree. Couldn't the census bureau have used some of those extra employees to get this out a tad faster.
Someone was on the ball here...you are lucky it didn't take 2-3 years.
The census bureau is run by private contractors...the employees just usually make a mess getting out of the way. You think I'm kidding? I kid you not.
You always delay bad news (like the NBER declaring the start of a recession) so that you can say, "It was bad but that is sooo yesterday."
Wow. Can not believe some think 2011 is going to be the return of America. They are high off their horse at Business Insider.
As soon as California falls the other fiscally bad states will go down. And I doubt the TP congress will bail em out!
to my fellow ZH'ers that are buying the dips. get your silver.
received an email from apmex that the mint is limiting allocations 2011 silver eagles to distributors.
once you have enough coins just start buying 10oz or 100oz bars
They're all gonna' need a much bigger pump to reflate their way out of this.
They got an elite gang of crazy nannies with english accents and magical umbrellas to fix it.
http://www.youtube.com/watch?v=FTeWGD4Q9T4
http://www.texaswatchdog.org/2011/01/policy-group-estimates-health-care-reform-adds-31-billion-to-Texas-Medicaid/1294263466.column
Fucking lunacy.
Lets hope Obumblecare is found UNCONSTITUTIONAL!
Look at that; Looks like Obama and Pelosi junked your post. :o)
Bailout for states coming up soon enough.
Absolutely they will consider it. Then reject it. Then it will get really hot-and-exciting. Then, IMHO, they will conclude they *must* do something. Then, they will attempt to write a check, and actually realize they can't.
IMHO, the states will *not* be bailed out because they will realize at that point that it is impossible (that much money cannot be conjured).
But, it won't be for lack of wishes-hopes-and-dreams.
http://www.zerohedge.com/article/watch-political-central-planners-were-doomed
It's not a matter of printing that much money. it's a matter of moral hazard. People are people. Now they are not happy about bankers getting free money, but they are passive. Now if you tell Texans that California will be getting tax money then it will be a fire storm. Everyone will be pissed and want to line up for their handout.
So they just can't overtly bail anyone out, without having to bail everyone out. If I was the Fed I would just start buying munis. Its more important to keep perceptions calm then actually worry about end results. The only real realistic goal is to try to outlive the EU and then reassess the situation.
I agree, but that is a logical conclusion. It implies you can foresee the consequences of your actions. IMHO, elected officials are absolutely NOT that smart. They have no idea what they are doing, most especially with fiscal concepts, and numbers this large. (Any official that can understand would not be sitting in that chair -- because the game is already over.)
Rather, the State bailouts will fail for practical reasons: (1) They won't be able to cut a check that big, and (2) (far more minor), political screaming when North Dakota is told it must honor pension largess to retired California union workers.
The California $20B annual deficit is a joke (it is far higher than what is reported). California unfunded pension liabilities top $500B. That's nothing. California is about to get jacked with massive municipal bond roll-risk and rate-hikes, all in the face of massive economic exodus. The only ones remaining will be the welfare recipients. Even the six- and seven-figure pension recipients will leave (and California will be expected to continue to mail them their pension checks).
You're talking about cutting checks $1Trillion at a time for California, New York, Illinois, New Jersey ... and that's just as we're getting warmed up. You'll need $10T just to make a "dent", and the "real" number is closer to $20T.
We won't make it to moral hazard -- even the idiots in Congress will figure out they can't cut checks that big.
But yes, I also agree that the Fed will buy Munis ... until they can't.
Yes elected officials are more or less retarded, but their advisers are less so. And we all know they don't propose or write their own legislation, it's done by their owners. Those owners are not dumb, look at the stunning coup they have pulled off.
I must disagree about the check. These guys backstopped what 24 trillion in 08. Nothing is to big for them, hell they would take on the entire derivative bad bets if ordered to. Trillions don't matter, just so long as Mr. Market doesn't figure it out right away. So long as they don't announce the size most won't even notice, so they would be best served by opening some vague facility under the treasury to extend them credit to help stabilize the market. Sell it as a back stop not a bailout. The dollar is a dead man walking, now is just the question about how they will try to keep it shambling forward for as long as possible.
All pensions to my knowledge are simmering witches brews. All will fail to provide what they promised, so CA is not unique in that. Not sure everyone will bail out of CA, still expect some rich folk from Russia and China to take up shop in San Fran. But yeah CA will collapse, along with most states, IL is a nightmare. My best friend just got offered a 30% raise to move there and he refused because he knows the place is going to get lit up.
Though at this point I don't expect them to even to try to pass it because it would draw to much attention to the problem. It's about perception management so it will be up to Benny and the Ink Jets to carry the ball on this one. Seems like the only thing that matters is holding the system together as long as possible and eventual damage be damned.
Is it this weeks payckeck or next in which i see the damage?
Ok - I'll ask, the $477B in federal grants in '09, is this part of that years federal annual deficit or is there another special accounting for this???
For states part, I believe they are paying (or at least supposed to pay) interest on all this money? Even at 3% this is an additonal $15B being paid out by states annually...and that's just for one years "grants"?
I have been reading that states revenue in 2010 is actually better than expected. 2009 numbers are worthless.
I don't doubt states show better revenue with higher taxes but given that Federal tax receipts from '09 vs. '10 were almost totally flat
Personal income and payroll Fed tax revenue:
'09 = $1,775B
'10 = $1,733B
I'm questioning how much better off states are in '10? Particularly w/ property taxes dropping further in many states?
info available in - A Citizen's Guide to the 2010 Financial Report of the U.S. Government
Can you provide some links?
From the GAO -
http://www.gao.gov/financial/fy2010/10guide.pdf
Thanks. But that does not seem to be about the States. It is the Federal Government.
There's a lot of survival cash being pulled from 401ks.......a taxable event + 10% if under 59 1/2.
Good point and right you are - and taxable regardless of gain or lose within the 401k since it all went in pretax...the only modifier would be that individuals may be paying in lower tax brackets.
Anybody wonder why Uncle Sugar dropped SS deductions by 2% ? Of course, USG is both insolvent and irresponsible but that's another matter. That percentage is no doubt their projection of what they'll make up in panic 401k redemptions by those very same employed and beaten down with debt who got the SS rate cut. A wash. Very clever.
That 34 weeks of equity outflows is not all being hoarded.
Yo Reign,
totally agree on the outflow - but also consider a lot folks have stopped contributing as well. Not officially an outflow but absent an inflow, any outflows have no balancing offset.
the less clever part is that the SS surplus is forced to buy T's and has been a sizable buyer of T's for years. This has effectively helped BB to mop up excess T's.
However, now SS will run a large deficit, will buy no T's and likely need to redeem a fair number only adding to the supply needing to be picked up in '11 and '12. This is likely a swing of another $100, $200, maybe $300B in total from the plus side to negative?
agree........and the curtailed inflow is another taxable event !! Didn't think about that side of the tax con. Brilliant !!
Actually, neither did I! Well played. Just one more tax pull forward of what was meant to be "retirement" money that won't be there.
So many one time tricks to be played to keep the game going.
And don't believe the new leftist water report. Says government water is the best. Yeah, best way to collect more and best way to distribute serfdom drugs. Watch out!
http://breakingnews.ewg.org/bottled-water-2011-search
Rather the government's than whatever you are smoking
Soros drone. Ken Cook and Richard Wiles of EWG have a massive history of lies.
Probably because of the reduced Property Taxes. Local Governments based their budgets on the rise in Property Taxes. Now the taxes are being reduced.
Example: I have 2 properties in Baltimore City.
Property 1 Property taxes were $3,000. went up to $7,100. in 3 years.
Property 2 Property taxes were $3,300. went up to $8,500. in 3 years.
That was an increase of $9.300. per year. This killed me but it was good for the City as they spent this money like water.
I appealed the Taxes and now they are:
Property 1 $4,200.
Property 2 $5,200.
Still higher but a lot less revenue for the City and I have a little breathing room.
I read on a conspiracy site, "the master plan" is for the federal government to take over the operation of failed states. Can this happen?
Fed money always comes with strings -- big money with steel cables.
Why involve fedgov? The Federal Reserve will buy the muni debt, encouraging further issuance of said muni debt. Who wins? The banks!
FedGov doesn't need State Defaults to "Take Control"...
If you consider how much money the States recieve from the Feds already... Medicare/Medicaid, Hiway Funding, Law Enforcement, Water, Farming, Disaster Recovery, Etc... The FedGov took over a long time ago. They just haven't started giving big orders yet...
Think of your State level politicians as an extension of the FedGov... Local Arbiters of FedGov policies.
States are infected with same disease that the FedGov has... The main symptom is a Politician who thinks that the World ceases to exist when they die.
What is it with all these Old Fucks in charge of shit? Making decisions that will impact all us poor young retards down the road sometime after they shit the bed or go full dementia and couldn't care less what the fuck is happening...
If you have 5-10 Years of life left... Go live it. Advise younger folks when they ask... But get the fuck out of the business of making decisions that will cause me pain down the road... Or you will be headed to see Dr Kevorkian as soon as I can get you an appointment.
Not according to the Constitution.
And if you think Katrina was a cluster F---, wait till they try to manage a state.
Whats to stop them? A tea party demonstration?
Old news. What happened in 2010? Probably up over 2009 in sales taxes, but flat to down in property taxes.
You must be tripping?
B,
I'm definitely tripping!!! The more I know the farther down the rabbit hole I fall!!! The more the world sez I'm crazy and I'm left wondering because I'm sure they are delusional...and one of us is likely right? I just worry 'cause the true hallmark of a crazy would seem to be the delusion that everyone else is crazy???
I'm left wandering among my coworkers, friends, family pretending all is well...none want to hear anything but the lies and I have totally given in. I know what I know, prepare for my family best I can and that's far as it goes.
H, don't fall, walk! Touch base on line with other "red pill" folks and judge for yourself who's dealing with reality. Forget proseletizing. Folks have to choose the "red pill" -- it's always on offer. If you discuss economics/finance/sytemic fraud with other people, do it when they raise the the topic then stick to established facts (they are abundant), avoid extrapolation, forecasting and opinion -- and use the facts sparingly. Also take care of yourself--you'll live longer and better if you use meditation rather than immoderate alchohol or distractions to cope.
Chris, I may be full of shit and you may be right about sales taxes increasing in 2010. However, a positive change from 2009 to 2010 is like looking through a tube--zoom back and see how 2007, 8, 9, and look at 2010 in that larger time frame. Many things done to cope witht he 2009 collapse were one time tricks and "kick the can" deferrals. Without recovery to the near the old high levels the pain will continue -- and likely will be worse even with higher sales tax revenues as real structural budget changes will be required. See what Brown brings to the table in CA on Monday to get an idea of what's really up.
My thought exactly. How could anyone be surprised by data from the worst financial crisis year since the GD?
And you also may want to check out our friends at CR, who have pretty much clearly and concisely called this recession and recovery to a "T": http://www.calculatedriskblog.com/2011/01/brighter-outlook.html
Harry (or whatever your name is),
you come up w/ some crazy shit. Reposting for your pleasure the "recovery" from '09 to '10...
Personal income and payroll Fed tax revenue:
'09 = $1,775B
'10 = $1,733B
info available in - A Citizen's Guide to the 2010 Financial Report of the U.S. Government - Go to GAO to check it out yourself.
C'mon Harry,
we also had the lowest Fed taxes since the '50's, the lowest interest rates, very low energy costs (remember, '09 started w/ $30 barrel oil), Federally we spent in excess of $4T and taking in $2.2T ($1.8T in direct goosing) and all we came up w/ was a mild decline of federal personal tax revenue....After Trillions in one time stimulus.
Harry, the flag is the perfect avatar for you, because you perfectly represent mainstream America. Overdosing on Hopium.
RIGHT its all much better now Im sure, everything is so much better and everyone is paying more property taxes..
nobody believes there is a deficit that the US government can not fill.
Of course, seen the UST market lately?
But Bubblevision and Bloomberg both had assclowns on that said revenues improved. Hmmmm, I wonder who is lying. Especially since there is talk of a new Constitutional Amendment to allow for "State Bankruptcy" being bandied about in the nation's sewer, er, DC.
I find it another way to visualize how much money the Fed is printing, and using to buy up "bad securities" from the banksters.
Stated as total state revenues in 2008 - $1.6 Trillion. Think about that. 330 million people, majority paying state taxes. Income from public employee retirement plans, unemployment compensation worker's compensation, etc. And it was $1.6Tr in 2008 and $1.1Tr in 2009. How much has the Fed pumped since 2008? And their ZIRP hurting the states while letting the banks make money on essentially free borrowing.
Really f---ed up!
This is good news not bad news.
Don't worry gang. This is America. If we don't have the money, we just print it.
And there, in brief, is why America is sure to collapse and take the global fraudconomy with it.
Every other country has a self correcting mechanism that wouldn't allow a single sovereign currency to print global paper (formerly known as money) to export it's debts, pass unlimited money to all it's "friends".
Whoever sold Bretton Woods, I want that guy on my sales team. Must have been giggling while he said stuff like it will be backed by gold (for a while), that we'd never monetize (until we do), we'd never run big deficits (until we do), blah blah.
This reminds me. I gotta send a birthday card to my cousin Fuck Your Taxes.
Much like the PIIGS of 2010, this will have little effect on derailing the bull market and will go down as just another little nuthinburger of 2011. Until the trend changes I'll remain long. After all, Ben has my back-LOL
you convieniently left out the fact that state revenues this year are way UP, and likely to be up again substantially in 2011
"Conveniently left out" hum, how do you leave out what isn't published or known? 2010 numbers have not been published. Now if you mean was not guessed like you have. I would guess you are also wrong about the amount of revenue states will make. I believe accelerating pension costs to the tune of 10k baby boomers retiring every day will add to costs. States at best with massive U.S. national stimulus debt will benefit a small amount. That's my guess, now who will be right? Next year we will know or when the top five debtor states declare bankruptcy through bond auction failure.
Saw that one coming a mile away.
States are competing with DC for tax money, nobody will cut.
even if revenues stabalize, which i strongly doubt, the pension benefits and health benefit of state workers gets higher and higher
Right you are S,
that is the real wonder of it all...it's not just 8% annualized growth of pensions, it's 8% compounded annualized growth. So if you miss a year, it's not only the 8% for the current yr plus 8% from previous but you need make up the missed compound as well...miss 2yrs...miss 3yrs...plus we came into this with a hole from the good times and that's some mighty large order for '11 to make up for 3 years plus what's needed for '11 to avoid an even larger hole for '12...blah blah. Fucking ponzi <anger off>
Well you're missing the point on state budgets as well and bailouts. Banks don't forgive and they don't forget and neither does the bond market.
2011 states will be broke 37 seconds after their budget passes. And some will be in default 58 seconds before their budget passes.
"in the same year, state government spending rose by 3%, while that pervasive source of backstop funding, the US government, saw its grants to states increase by 13% to $477.7 billion."
Hmmm...I wonder where they got it?
Shovels ready yet bitchez?
Thats right, Prichard Alabama does offer clues to what it will be like for the rest of the country. The city essentially stopped paying pensions and benefits to them. You know the dark joke about this whole mess will be that all these cops and firefighters and all public employees who thought they where safe (because it was considered safe to get a job in a state position) but now are seeing that those promises aren't worth the paper it was printed on, even with a court order. Because you can say all you want that it is mandated by state law or whatever to pay the pensioners, but it there is no money there's no money period. And judges will side with local and state govt. to do the unthinkable if it enables the unfreezing of govt. both financially and politically.
In essence they will allow them to file for bankruptcy and then they will be able to make changes to the Union contracts and other things.
Just in time for the ISM:
"The State of Texas will implement a mail-in rebate program to help residents replace older, inefficient appliances with new, ENERGY STAR® qualified and ultra-efficient appliances. The program will reopen on December 20, 2010. The previous program began at 7 a.m. Central Time on April 7, 2010 and closed later that day.
Total Funding Available: $10,000,000"
No tax issues here in Texas.
http://www.energysavers.gov/financial/rebates/state_TX.cfm
Im surprised the state of Texas is participating in any such thing as that.
Tenth Amendment to the United States Constitution:
“ The powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people. ” “ ” “ ” “ ”