You Know It's A Fiscal Crisis When... Republicans Raise Taxes

As a reminder, America’s state and local governments are going broke.

In the most high profile example of what can happen when the fiscal nightmare rubber meets the ratings agency road since Detroit, Moody’s cut Chicago’s ratings to junk last week after the Illinois Supreme Court struck down a pension reform law that would have paved the way for Mayor Rahm Emanuel to push through legislation aimed at closing funding gaps for the city’s worker retirement funds. Pension costs are 18% of revenue in Chicago, more than double the amount of the next closest major US city.

Meanwhile, in Louisiana, LSU is facing funding cuts of 82% after falling oil prices blew a $1.6 billion hole in the state’s budget — if the cuts are implemented in full, the school will face the university equivalent of bankruptcy.

These are but two examples. As we pointed out earlier this month, nearly half of US states face funding gaps with 17 states reporting negative Y/Y revenue growth in 2014. The situation is so bad in Kansas (where tax cuts pushed through by Governor Sam Brownback have bankrupted the state government) that schools are being forced to beg for emergency funding in order to pay salaries (perhaps Varoufakis has some ideas).

Here’s a look at which states are in trouble:

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