Would you still think of moving to these regions after budget cuts in state funding?
The mortgage meltdown has spread to other components of the macroeconomy.
The Center on Budget and Policy Priorities has released a report that most states are facing budget deficits this year. First on the list is California, which needs more than $22 billion to break even in revenues. Prashant Gopal of Businessweek reports that the Golden State would have to forego additional funding for health care. Other highly affected areas include Alabama, Arizona, Delaware, Florida, Georgia, Illinois, Iowa, Maryland, Michigan, Minnesota, Nevada, New Jersey, New Hampshire, New York, Rhode Island, South Carolina, Vermont, Virginia and Wisconsin.
The trouble caused by excessive selling of subprime mortgages and the collapse of the housing market has slowed down property sales and dropped retail sales revenues to dangerously low levels. The crisis, aggravated by higher inflation values and increases in unemployment rates, has pulled down tax collections for the year. In effect, there will be a reduction in social services.
Social Services Likely To Take a Hit
It’s a domino effect and the tiles are falling swiftly. What areas are affected specifically?
• Salaries for public employees
• Hiring and retention
• Higher education funding
• Healthcare funding for Medicaid
• Nursing homes
• Disabled and elderly care
• Child welfare and educational facilities
• Public infrastructure
Fiscal policies play an important role in raising revenues and restoring a balanced budget. Increased corporate and ad valorem taxes are some of the tools to slash budget gaps. With tighter credit markets, these states would have to find and lure credit companies to loosen their lending policies and let the forces of supply and demand take over the market. The federal government would once again guarantee these states so that they could better cover their necessary expenses and continue public assistance.
There’s a higher possibility that migration to these states may reduce your chances of welfare assistance. You may benefit from the same service but at a lower amount. But in these shaky economic times, no one really has an accurate forecast.