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Most state budgets have been walloped by the financial crisis. But, as we noted in November, 10 are really bad, like California bad.
Now, the real pain is coming.
Decrying budget shortfalls is an abstract exercise, but service cuts, increased taxes, and layoffs are all very real, and when they happen, GDP falls.
Paul Krugman once referred to states that slash their budgets as Little Herbert Hoovers.
It's a bleak picture. Based on historical precedent, state budgets are likely to get worse, bottoming long after the national economy, with costs rising faster than revenue.
The Next Wave Of GDP-Killing State Budget Slashing Begins
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