Bailouts or Bankruptcy?

Engage Volume 12, Issue 2, September 2011
By Michael S. Greve
September 12, 2011

In early 2011, the states’ financial travails were the stuff of headline news. Deficits for the current budget cycle were estimated at $175 billion. In some states (Texas, California, Nevada, and Illinois), the shortfall exceeded thirty percent of projected budgets. One way or the other, states closed those gaps to comply with the balanced-budget amendments contained in all state constitutions except Vermont’s, and public attention shifted to the budget-and-debt-ceiling melodrama in Washington, D.C. However, the parlous fiscal condition of state and local governments remains a lasting concern...