As state governors meet, a scorecard on states' challenges

State governors are entering a weekend of talks in Boston about policy matters. Here are four indicators of the 'state of the states.'

Michael Dwyer/AP
Washington Gov. Chris Gregoire, center, listens along with fellow governors, Colorado Gov. Bill Ritter, left, Wyoming Gov. Dave Freudenthal, top right, and South Dakota Gov. Mike Rounds, right, during the annual meeting of the National Governors Association, Friday in Boston.

State governors gathered in Boston Friday for their annual meeting, with the theme of tight finances continuing to bind them together.

Not all states are in dire fiscal trouble. But neither have they navigated fully through the challenges posed by a deep recession.

"States are facing tough fiscal situations," said Gov. Joe Manchin (D) of West Virginia, speaking at a press conference as he prepared to chair the National Governors Association for the coming year.

Taxpayer frustration is "now reaching a boiling point because of the recession," added Gov. Chris Christie (R) of New Jersey. A core problem, he said, is that wage and pension costs for unionized state employees keep rising, even when workers in the private sector face cutbacks in their pay.

Gov. Deval Patrick (D) of Massachusetts raised the economic issue with a blend of bluntness and levity as he welcomed fellow governors to Boston.

"We are especially pleased to have so many people here to pump some welcome dollars into our local economy," he said. "We estimate that local restaurants and entertainment venues and hotels will see an injection of about $3 million over the next couple of days, and we are challenging our guests to beat that projection."

As the governors' group enters a weekend of talks about policy matters, here are some indicators of the state of the states:

The recession's toll on jobs. Although the impact of the recession reached nationwide, some state economies were hit much harder than others. Topping the list is Nevada, an epicenter of the housing bubble. With a crash in property values and construction, the state now has 13.4 percent fewer jobs than when the US recession started in December 2007. That compares with a nationwide job loss that stood at 5.3 percent as of May, according to Labor Department data collected by the Federal Reserve Bank of Minneapolis.

Other states that lead the job-loss list also saw building booms. Those are Arizona (9.6 percent of jobs have disappeared since 2007), Florida (9.2 percent), California (8.4 percent), Oregon (8.2 percent), and Idaho (7.9 percent). The other leader on this downbeat list is Michigan (9.3 percent), where the auto industry took a steep dive. By contrast, North Dakota and Alaska now have more jobs than they did when the recession began.

Job-market gains this year. Most states, even the hard-hit ones, have seen a small employment change for the better in 2010. States with the biggest revival in jobs, in percentage terms, include Indiana, Wyoming, Massachusetts, Texas, and states that are near the stimulus-money capital of Washington, D.C. But all these states still have substantially fewer jobs than in 2007. And a few states have seen continuing job losses during 2010: Vermont, New Mexico, and Nevada.

State budgets. Despite some signs of recovery this year in the broader economy, few states have seen a rebound in tax revenue. Many have imposed some tax hikes, but voters have only a limited appetite for that kind of fix. Legislation that would extend federal aid for coping with rising Medicaid costs has stalled in the Senate. The result of all this is that many states could face continued pressure to find spending cuts.

State payrolls. As states have trimmed their spending, many have done so without resorting to many pink slips. Federal aid from the 2009 recovery act is one reason. In education, states are employing more people now than before the recession began. Aside from education, states have made modest cuts – with a workforce that's down about 2 percent from a mid-2008 peak.

Some states have begun to add workers again, while others such as California, Connecticut, and South Carolina are operating at a lean "new normal." Some budget experts expect to see more job cuts in states this year, especially if President Obama fails to win a new round of federal aid for states from Congress.


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