How Fiscally FUBAR Will Your State Be?

Tyler Durden's picture

We all stand 'fingers-over-eyes and thumbs-in-ears' awestruck at the immense wreckage that the fiscal cliff titan will wreak upon the country. However, deep inside our socially responsible minds, all we can really think about is - what about my needs? The Pew Center On The States has just released a very broad and detailed look at just how the increased taxation and reduced spending will impact each and every state. Here, in two simple charts, is the answer.



There is a great deal of uncertainty about whether any or all of the policies in the fiscal cliff will be addressed temporarily or permanently, individually or as a package. Given this, it is useful to look at the different components of the fiscal cliff; examine how federal and state tax codes, revenues, budgets, and spending are linked; and provide a framework for assessing how states could be affected.

For example, almost all states have tax codes linked to the federal code. When certain expiring tax provisions within the fiscal cliff are analyzed independently, they could increase state revenues.

  • For at least 25 states and the District of Columbia, lower federal deductions would mean more income being taxed at the state level, resulting in higher state tax revenues.
  • At least 30 states and the District of Columbia would see revenue increases because they have tax credits based on federal credits that would be reduced.
  • At least 23 states have adopted federal rules for certain deductions related to business expenses. The scheduled expiration of these provisions would mean higher taxable corporate income and hence higher state tax revenues in the near term.
  • Thirty-three states would collect more revenue as a result of scheduled changes in the estate tax.

However, six states allow taxpayers to deduct their federal income taxes on their state tax returns. For these states, higher federal taxes would mean a higher state tax deduction, reducing state tax revenues.



The scheduled spending cuts also would have a significant impact on states. Federal grants to the states constitute about one third of total state revenues, and federal spending affects states’ economic activity and thus their amount of tax revenues.

  • Roughly 18 percent of federal grant dollars flowing to the states would be subject to the fiscal year 2013 across-the-board cuts under the sequester, according to the Federal Funds Information for States, including funding for education programs, nutrition for low-income women and children, public housing, and other programs.
  • Because states differ in the type and amount of federal grants they receive, their exposure to the grant cuts would vary. In all, the federal grants subject to sequester make up more than 10 percent of South Dakota’s revenue, compared with less than 5 percent of Delaware’s revenue.
  • Federal spending on defense accounts for more than 3.5 percent of the total gross domestic product (GDP) of the states, but there is wide variation across the states. Federal defense spending makes up almost 15 percent of Hawaii’s GDP, compared with just 1 percent of state GDP in Oregon.

There is still a lot of uncertainty about how the fiscal cliff would affect states. States might amend their own tax codes in response to the federal tax changes. How across-the-board program cuts under the sequester would actually be implemented is still unclear. In addition, the effect on individuals from the tax increases and spending cuts will vary by state, and states will face difficult choices in addressing these impacts.



Decisions will be made even amid this uncertainty. The public interest is best served by an enriched policy debate that incorporates implications for all levels of government and leads to long-term fiscal stability for the nation as a whole.


Full report here:


Pew Fiscal Cliff Report

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ACP's picture

"What about my needs?"

Hmm...probably explains why a certain party is no longer quoting JKF.

Michaelwiseguy's picture

No worse than France the day after WWII.

czarangelus's picture

California would be a temperate paradise if not for politics and politicians.... Long Barony of Santa Cruz.

AldousHuxley's picture

because California is a paradise that people still tolerate idiot politicians.


but tolerance has its limits.




fourchan's picture

detroit is going to bankrupt next month and as we go you will go.

THX 1178's picture

You're from Detroit? God Damn. What's it like?

dark pools of soros's picture

It's like Bartertown without anything to barter

e-recep's picture

damn, i need a new keyboard now.

toady's picture

I've been say watch Detroit, it's what the rest of North America will look like in 5 to 10 years.

FEDbuster's picture

The parasitic cancer will spread, until it is treated with targeted radiation (figuratively speaking of course).

smlbizman's picture

hard to understand how the motor city could be in trouble...i mean you guys just elected that 8 time felon....

fonzannoon's picture

Many of the teachers in NY have a retirement plan that Guarantees them 8.25% fixed on their contributions. I think it may be down to 8% now becase of where rates are. The Pension system is so fucked they are already borrowing from it to pay out to the retirees. If housing had not crashed they could keep raising real estate taxes under the radar but people are catching on. The punch line is many teachers chose option "B" which is the variable or "market" option because they felt 8.25% did not cut it. Granted this is not inclusive of their pension or their free healthcare. This is just their voluntary retirement plan. I want that pension system to break so bad my balls hurt thinking about it.

Seasmoke's picture

Patience grasshopper , you wil be able to shoot your load on the very near future.

HappyCamper's picture

"The punch line is many teachers chose option "B" which is the variable or "market" option because they felt 8.25% did not cut it."

These are the geniuses teaching our children?


Michaelwiseguy's picture

Why should the 75% of the population who don't get a pension, have to guarantee the money for the 25% that do?

AldousHuxley's picture

because 75% are delusional thinking that somehow they are not wage slaves just like teachers and don't need unions or good retirement plans and believe executives and investors will ensure fair wage????


teachers union problem isn't the retirement. It is that they are not including the private sector in their fight.


it is 25% in the non-executive private sector that is paying for 75% of lazy Americans in public sector or heavily political private enterprises.

It is the upper middle class with all of the burden.

Michaelwiseguy's picture

The upper middle class will be taken out as usual, and there will only be rich and poor. I just hope the poor have enough guns and ammo.

TPTB_r_TBTF's picture



The poor have enough guns, but they donT have enough ammo.

The rich have plenty of both.


SmallerGovNow2's picture

Majority of the uber rich have been catered to their whole life and haven't a clue about how to take care of themselves in the economic wasteland environment that is coming...

earnulf's picture

Doesn't matter if you are rich or poor, it only takes a single bullet with "occupant" on it.

Manic by Proxy's picture

All public pensions are going to Fuckville. I will happily stand on that roadside to ruin, chanting old slogans like "Fuck you and the horse you rode in on" not caring about the dangling participle, but cheering the slack- jawed "teachers" marching to the friendly confines of the well-upholstered FEMA camp where they can daily bask in the glow of vintage Obama speeches and listen to Bruce Springsteen singing about New Jersey, watching Michael Moore cinema verite until they snap like decayed shit noodles and turn on each other, screaming obscenities like "Ron Paul was right" and gouging out eyes with silver spoons wrested from the mouths of banksters. Yeah, that's how it should be. Excuse me, back to the Sterno.

QuietCorday's picture

First we had Ghenghis full Bukowsky style and now Manic's gone Ginsberg.

This is a good day for comment prose on ZH. 



bushwarcrime's picture

ohhh that's good,  Stone? what was your name before you changed it?


Cursive's picture

Hmm.  DC, Maryland, and Virginia are all sucking large off the federal teat.  Arkansas, New Mexico and Hawaii not far behind.  Press the reset button, already.

notadouche's picture

Arkansas?  I don't read it that way.

Cursive's picture


Mistake.  Should be Alaska.

ArkansasAngie's picture

Thanks :)

Arkansas won't pay much more and ... since we don't get much in the first place we won't loose much either.

Please forget you've ever heard of Arkansas.  Please ... please stay where you are.

MachoMan's picture

I wish we could tell that to all the refugees coming in from mississippi, tennessee, and the bootheel...  as well as all the damn yankees buying farm land...  at least the farm bubble will burst soon enough.  (many of the large landowners now have predecessors that purchased the tracts at tax sale for nothing following the last bust).  I shudder to think of our shadow public employee retirement obligations...  but we don't look too bad on the published paper at least.

dark pools of soros's picture

how can the same country pronounce Kansas and Arkansas so fucking differently

was there a fight or something?



tickhound's picture

Unrelated other than spelling.

Has to do with the "french" quapaw and the kansa tribes.  You kick them out then you name a state after 'em.

It was a procedure that laid the foundation for the diversity we champion today.

toady's picture

I pronounce them the same, Kansas & ar-kansas.

It does seem to confuse people when I'm in ar-kansas though ...

JLee2027's picture

Yes. My personal estimate is that 61% of Maryland's budget comes in some way shape or form from the Federal Government. And that's only what they can't hide. We are beyond FUBAR.

Fred Hayek's picture

While I bear you no personal animus, JLee2027, I think I speak for many across the U.S.A. when I say that I will richly enjoy the real estate bubble finally bursting in the lands around DC, the leafy suburbs where economic causality is kept at bay by Big Brother's spending. Let a thousand for sale signs bloom in every town like the prettiest flowers you ever saw. See how the rest of us have had it for 4 years.

AldousHuxley's picture

DC is rome. when rome burns satellite cities burn even more. elites will rescue DC, Manhattan upper east side, before anything.


just look at NYC real estate prices despite wall st. fallout. They are globally priced.


poor americans.

earnulf's picture

Well, they might rescue it, but I hope they have a way to grow food on concrete to sustain their upper east side lifestyle.

Hard to live without the basics, food, clean water, guess they'll still have shelter.

zuuma's picture



just look at NYC real estate prices despite wall st. fallout. They are globally priced.



But also look at large parts of NYC like Staten Island & Long Island that can't get the power turned on after a big storm.

Those sophisticated, global elites still crappin' in the hallways??  [I confess, that brought a smile to me :) ]

Did I not read about a high-rise in Manhattan (still?) that has no power & smells very bad? More hallway crappin', I guess.

When the big worldwide RESET hits, New York will be renamed to New Calcutta.

What rich dude wants to buy a pad that stinks & can't keep the power on?

Fat lotta good their Central Park East view & gold-plated toilet seat are now, huh?

Long Belize beach estates!

(I hear a nice one's coming up for sale very soon!)

Urban Redneck's picture

Even though I have rental property up in MD, I still hope they shut the whole thing down.  It's called shared sacrifice, and it's apparently a foreign concept in DC.  

Seasmoke's picture

Looks like the citizens of Washington state do not have to give a fuck about any cliffs.

Seasmoke's picture

Also I never realized how beneficial paying all these taxes in nj and getting. Very little back would be when we go over the cliff. Well at least we have that going for us.

fonzannoon's picture

Thats because NJ has "Jug handle" turns. Basically if you want to make a left you have to make a right. For that they deserve whatever bad comes their way.

flacon's picture

Not to mention sideways traffic lights. 

A Nanny Moose's picture

OT Rant: Goddamed Jug Handles!

First rule of driving in NJ: Wherever you want to go, you cannot get there from wherever you are.

Oracle of Kypseli's picture

I was told once that the best place in NJ is a smal town in the exact center of the state, because no matter which way you drive, you're leaving NJ.

We once got lost in Staten Island looking for the ferry. We aked some youngsters (heavy Italian accent) hanging out in a corner pizzeria.

They said: You can't get there from here. You first gottta go to some stteet I forget. Then they said: You will see the exxon station. you don't want that. You keep going. Then you see Angelo's pizzeria and you make a left. then you go about a mile and you see Mario's pizzeria and you make a right and on and on with pizzerias and gas stations.

We did get to the ferry and after all these years we still remember all the pizzerias in Staten Island and all the gas stations that we did not want but were there.  

dark pools of soros's picture

People in PA laugh at Jersey about all those too, but we got tons of jug handle turns out in the burbs, a big fucking circle by the art museum to be proud of, and plenty of death trap cross-overs that are like those slot car racer lane switchers that no one has a clue how to use