Fate of the States: The New Geography of American Prosperity (26 page)

Greenspan connection to, 39

Mortgage loans

adjustable-rate.
See
Adjustable-rate mortgages (ARMs)

Canadian system, 35–36

interest tax deduction, 35

irresponsible lending.
See
Subprime loans

loan modification programs, 34

postcollapse conditions for, 48–49

in U.S., historical view, 33–43

Municipal bankruptcy

bankrupt cities/municipalities, 60–61, 113–14, 186–93

priority payments after, 106, 186, 187, 192

Municipal bonds

bankruptcy and payouts, 106, 186, 187, 190

defaults on, 114–15, 183–84, 195–97

new issues (2010– ), 70–71

payouts by state residents, 77–78, 198

as revenue source, 65, 71

Nebraska, economic boom in, 156

Negative equity

defined, 7, 108

states with, 79, 86, 108, 162

Nevada

boom-time spending excess, 56

consumer debt problem, 74

education cuts, 108–9, 117

home price decline, 87, 108

home price escalation, 108

housing boom in, 45–47, 107–8

housing bust impacts, 108–9

mortgage credit, limits on, 86

negative equity in, 86, 108

poverty level in, 137, 141

state budget cuts, 55

state budget deficit, 108

subprime mortgage excess in, 86

tax rate hike, 69

unemployment, 47, 141, 143–44, 169

unfunded pension fund, 102

zero state income tax, 165–66

New Hampshire, S&L crisis, 49

New Jersey

consumer debt, 80, 169

education cuts, 123

housing boom in, 45

pension fund borrowing by, 62, 101

property tax, highest in U.S., 164–65, 169

state government indebtedness, 80

unfunded pension fund, 98–99, 104

New Mexico, poverty level in, 141

New York

fracking debate, 159

housing boom in, 45

pension fund health of, 102

state budget cuts, 55

tax receipts outpaced by spending, 62–63

New York City

consumer credit collapse, 75

population flight from (1950–1980), 180–81

public employees, excess payments to, 11

NINJA loans, 41

North Carolina

corporations moving to, 173

education cuts, 59

job creation in, 202–3

mobile capital investment in, 169

North Dakota

economic boom in, 109–10, 155–56, 180

employment growth, 159, 161, 169, 199

housing shortage in, 199

oil and gas production, 155, 158, 159, 161

personal income growth in, 159

Ohio

mobile capital investment in, 169

poverty level in, 137

unfunded pension fund, 104

Oil and gas production, in central corridor states, 158–61

Oklahoma

corporations moving to, 171

employment growth, 161, 169

oil and gas production, 159, 161

Orange County (California) bankruptcy, 186–87, 197–98, 201

Pawn shops, 85–86

Pennsylvania

boom-and-bust cycle, 23, 170

consumer debt, average in, 169

mobile capital investment in, 169

oil and gas production, 159

taxes, low in, 168–69

Pension funds.
See
Public employee pension funds

Pension-obligation bonds, 103–4, 184, 189–90

Personal income growth, states with, 159–60

Plath, Tony, 42

Police department cuts, 129, 131–32, 190

Population shifts

andboom-and-bust cycles, 19–20, 25, 169–70

to lower taxation regions, 168–69, 171

migration to central corridor states, 27–29, 63–64, 110, 157, 163–64, 177

to Sand States, during boom, 82

state tax receipts, impact on, 27–29, 63

Poverty, 135–45

breaking cycle, actions for, 144–45

high-poverty states, 135–37, 141

rate comparison (2000 and 2010), 142–43

and unemployment, 137–38, 141–44

Poverty assistance

dependency created by, 140, 144

federal aid/costs related to, 138–40

program expirations (2013), 140

states with highest, 138–39

Prison system cuts, 129–30

Privatization, 145–51

arguments against, 149–50

assets to privatize, 145–48

economic advantages of, 145–49

of education, 140–41

global examples, 146, 147–48

Indiana example, 145–46, 149–150

job creation through, 145, 149

of state park operations, 69–70

of waste collection, 128–29

Property taxes

cap on, California, 61–62, 132, 171

as factor in home purchase, 79, 168–69

highest in U.S., 164–65, 169

hikes after housing bust, 66, 69

and home price decline, 78–79, 88

increase during boom, 81–82

as local government revenue, 64, 66

and public services, 7, 27, 66, 128

Public employee pension funds, 89–106

arguments against high payouts, 91–93, 190, 192–93

cost-of-living adjustments (COLAs) on, 96, 97–98

crowding out of state budget by, 92–93, 104–5, 115

disclosure on unfunded debt (2008–2011), 91, 95, 101–5

financing of, 97–100

future scenario for, 115

investment returns, accounting tricks for, 100–101

pension-obligation bonds, 103–4, 184

priority over other spending, 92, 115, 192

reforms, types of, 102, 105–6, 184–86, 193

responsible states, 102

running out of money prediction, 96

state borrowing from, 62, 65, 95–96, 101, 102–3

taxpayer responsibility for, 95, 97–98

unfunded state obligations, 53, 70, 91–92, 98–99, 101–2

Public employees. See also specific states

excessive benefits to, 11, 60–61, 81–82, 89–91, 116–17, 132

incentives for workers, 94–95

pensions to.
See
Public employee pension funds

reform of system, 203–5.
See also
Privatization

Public safety problem, and budget cuts, 129–32, 190

Real-estate boom.
See
Housing boom

Relocation.
See
Population shifts

Retirement plans

growth, factors in, 97

losses and financial collapse, 94, 97

of public employees.
See
Public employee pension funds

Reverse wealth effect, 88

Rhode Island

pension fund reform, 106, 193

pension investment return assumption, 100–101

unemployment, 169

Right-to-work laws, 166

Romer, Christina, 67

Roosevelt, Franklin D., 33

San Bernadino (California) bankruptcy, 113, 131–32, 191–93

Savings-and-loan (S&L) banks, 34–35, 37

Securitization.
See
Mortgage-backed securities

Slavery, 20

Small businesses

credit, sources for, 7, 79

credit cuts, impact of, 45, 79–80

growth, central corridor states, 162

Smart money, 167–68

South Dakota

personal income growth in, 159

zero state income tax, 165–66

State budgets. See also individual states

boom-time spending excess, 9–11, 46, 49, 56–63

closing gaps, methods used, 62, 109, 112, 117

debt caps of, 77–78

debts, taxpayer responsibility for, 11–12, 77–78

discretionary budget items, 117, 119

downsizing, necessity of, 145–46

economically stable states.
See
Central corridor states

economically unstable states.
See
Housing-bust states

education cuts, 58, 119–24

emergency money, lack of, 117

expenditure changes (2000–2010), 56–57

fiscal cliff, 140

geographic mobility, impact on, 26–29, 63–64

largest expenses, 119

legal disclosure requirements for, 53, 91, 95

libraries, cuts to, 124–27

Medicaid costs, increase in, 59, 65, 119

miscellaneous tax hikes, 69

mismanagement, lack of transparency about, 113–17

pension fund debt.
See
Public employee pension funds

pet projects, financing of, 11, 57

public health cuts, 73

public safety–related cuts, 129–32

revenue sources for, 53–55, 65, 70–71

tax rate hikes, 69, 78–79

tax receipt declines, 27–28, 57–58, 63

tax receipt rebound (2010– ), 63, 69

tax receipts outpaced by debt service, 72–73

tax receipts outpaced by spending, 58–59, 64–65, 72, 111, 118, 136

total liabilities (2011), 111–13

waste-collection cuts, 127–29

welfare monies from fed to, 138–40

State governments. See also specific states

ARRA money, use of, 67–69, 140

borrowing and loans by, 11, 65–66, 71–72, 77–78, 116, 118

federal government transfers to, 67–69, 70, 112–13

gambling, considering, 69

housing bust, overall impacts, 6–11, 49, 57–59

municipal bond debt issued by, 65, 70–71, 77–78

privatization of services, 69–70, 128–29, 145–51

public service delivery by, 54, 66

and unemployment cycle, 10, 63

Steel industry, 23

Stockton (California) bankruptcy, 60–61, 114, 130, 189–90

Subprime loans, 7–8

advantages for banks, 2, 5

ARMs as, 39–41

bank-targeted states, 7

birthplace of, 82–83

creation and sale of, 39–40

irresponsible lending practices, 3, 5, 7, 39, 41, 43

securitization of.
See
Mortgage-backed securities

Suburbanization, 21

Sun Belt states.
See also
specific states

real estate inflation in, 26

Taxation.
See also
Property taxes

mortgage interest deduction, 35

state tax hikes.
See
specific states

zero tax states, 165–66

Tennessee, personal income growth in, 159

Texas

boom-time spending excess, 56, 57

corporations moving to, 171, 176–78

debt per capita in, 83

employment growth, 169, 177

infrastructure projects, 200–201

mobile capital investment in, 169

oil and gas production, 158, 159

personal income growth in, 159

population inflow to, 63–64, 157–58

poverty level in, 141

revenue, sources of, 57

tax receipts outpaced by spending, 63

waste-collection cuts, 128

welfare assistance spending, 139

zero state income tax, 165–66, 178

Textile industry, 20–22

Unemployment

breaking cycle, actions for, 144–45

economic costs of, 135–36, 141

insurance, state depletion of, 144

and poverty, 137–38, 141–44

states with highest rate, 7, 9, 47, 68, 160

states with lowest rate, 8, 160

Unions

contracts/compensation.
See
Public employees

right-to-work laws versus, 166–67

U.S. economy, 19–29

agrarian economy era, 20

boom-and-bust cycles, 19–20, 22–26, 170

economic crash/recession (2007– ).
See
Financial collapse (2007– )

housing/leverage revolution, 25–26, 44

Industrial Revolution, 20–22

manufacturing era, 23–25, 44

manufacturing revival, 17–18, 25

power revolution era, 22–23

state and local level.
See
Local governments; State budgets; State governments

U.S. government.
See
Federal government

Veteran’s Administration (VA) mortgages, 36

Virginia

mobile capital investment in, 169

waste-collection cuts, 128

Wachovia, 41

Washington, D.C., poverty level in, 141

Washington Mutual, 41

Washington State

state budget cuts, 55

zero state income tax, 165–66

Waste-collection cuts, 127–29

Welfare programs.
See
Poverty assistance

West Virginia, poverty level in, 141

Wisconsin, bid to lure business/people to, 173

Wyoming

high per capita income of, 123

oil and gas production, 159, 161

tuition costs in, 123

zero state income tax, 165–66