Executive Intelligence Review
Subscribe to EIR


Nine U.S. States Enter New Fiscal Year Without Budgets

July 3, 2017 (EIRNS)—Because of continued inaction on a federal (nationwide) level—including Congressional inaction on reinstating Glass-Steagall—nine states of the Union are entering the 2018 fiscal year (which started Saturday, July 1) without official budgets. Since states are not allowed by law to run a deficit, budget shortfalls must be met by a combination of service cut-backs and borrowed money (through sale of bonds). According to the National Association of State Budget Officers, the states without budgets on July 1 are Connecticut, Delaware, Illinois, Maine, Massachusetts, New Jersey, Oregon, Rhode Island, and Wisconsin.

The worst of these, Illinois—which has not had a budget for three years running—is now entering breakdown conditions. The situation is so severe, it prompted the state comptroller, Susana Mendoza (an elected Democrat), to issue an emergency video message last week, warning that, because of continued inaction by the legislature and governor, "derailment is imminent." The state now owes its vendors an astounding $15 billion in back payments, plus another $800 million in fines and penalties. In addition, a court ruling is expected on the state funding backlog for its (privatized) Medicaid "managed care organizations," which could add an extra $3.1 billion to the payments.

According to Mendoza, "social service agencies, domestic violence centers, mental health facilities, and senior and hospice care facilities" are all at risk of closure. Delayed pensions (teachers and state retirees) "are one possibility," but also could include non-payment of current employees, and cancellation of state-aid for schools at all levels, causing them to not open on time in the fall. "This is not a false alarm," she says, urging citizens to make their voices heard.

In New Jersey, a vindictive Republican Governor Chris Christie has reacted to the (Democrat-controlled) legislature’s inability to give him what he wanted, by closing all the state’s parks, beaches, and tourist facilities just prior to the July 4 holiday weekend. He then arrogantly headed off to spend the weekend at an official governor’s residence, located inside a state park! Casinos and racetracks will not be affected, since they generate revenue.

In Maine, Republican governor James LePage has forced the state’s first shutdown in 26 years, after the (again, Democrat- controlled) legislature refused to bow to his wishes of a $7 billion budget without tax increases. This despite the inclusion in the budget of a (possibly illegal) repeal of a 3% tax on the state’s wealthiest (those making over $200,000 per year), a measure which had been legitimately authorized by 357,000 voters in a referendum last year.

Without a commitment to job-creation through a program of infrastructure construction, as specified by LaRouche’s Four Laws, none of these problems will be solved in isolation.