Florida Governor Rick Scott shows how governors in at least nine states are approaching re- election campaigns next year by touting surpluses and pitching tax cuts, sometimes relying on one-time revenue to fund the breaks.
For the past four years, U.S. states struggled to close more than $500 billion of budget shortfalls caused by the recession, ushering in tax increases, spending cuts and clashes with public-employee unions.
Detroit is facing bankruptcy, and Chicago wants to cut retiree benefit costs. Both are turning to President Barack Obama’s health-care overhaul in what could become a road map for cash-strapped cities.
From Florida to Michigan, states are readying record budgets as tax collections are set to exceed prerecession peaks. The achievement is going unrewarded in the $3.7 trillion U.S. municipal-bond market.
States closed more than $325 billion of deficits in the last four fiscal years with spending cuts and additional revenue, according to the National Association of State Budget Officers. These balanced budgets have helped municipal bonds return more to investors this year than U.S. Treasuries, stocks, corporate bonds and commodities, even as Harrisburg, Pennsylvania, and Jefferson County, Alabama, filed for bankruptcy.
National Association Of State Budget Officers Photos