Fate of the States: The New Geography of American Prosperity (25 page)

39.
  U.S. Department of Commerce, Bureau of Economic Analysis, Regional Data, GDP and Personal Income, http://www.bea.gov/iTable/iTable.cfm?reqid=70&step=1&isuri=1&acrdn=1#reqid=70&step=10&isuri=1&7007=2011,2007&7093=Levels&7090=70&7035=-1&7036=-1&7001=1200&7002=1&7003=200&7004=NAICS&7005=-1&7006=00000,04000,06000,12000,32000.

40.
  Campbell Gibson, U.S. Department of Commerce, U.S. Census Bureau, “Population of the 100 Largest Cities and Other Urban Places in the United States: 1790 to 1990,” June 1998, http://www.census.gov/population/www/documentation/twps0027/twps0027.html#citypop.

41.
  Curt Guyette, “Detroit’s Vision and Revision,”
Metrotimes,
January 16, 2013, http://metrotimes.com/detroit-s-vision-and-revision-1.1430411.

Chapter 9: David Takes On Goliath: New Political Precedents

1.
  Catherine Saillant and Tony Perry, “2 Big Cities OK Cuts to Worker Pension Costs,”
Los Angeles Times,
June 7, 2012, http://articles.latimes.com/2012/jun/07/local/la-me-pensions-20120607.

2.
  Michael Corkery, “San Jose Voters Back Pension Overhaul,”
Wall Street Journal,
June 6, 2012, http://online.wsj.com/article/SB10001424052702303918204577449410119033138.html.

3.
  “Elected Official of the Year,”
PublicCEO.com,
2011, http://www.publicceo.com/elected-official-of-the-year/; Ben Tracy, “Calif. City Seeks to Escape Soaring Pension Costs,”
CBS News,
March 7, 2012, http://www.cbsnews.com/8301-18563_162-57392812/calif-city-seeks-to-escape-soaring-pension-costs/.

4.
  Floyd Norris, “Orange County’s Bankruptcy: The Overview; Orange County Crisis Jolts Bond Market,”
New York Times,
December 8, 1994, http://www.nytimes.com/1994/12/08/business/orange-county-s-bankruptcy-the-overview-orange-county-crisis-jolts-bond-market.html.

5.
  James O’Toole, “Jefferson County, Alabama to File for Largest Municipal Bankruptcy,”
CNNMoney,
November 9, 2011, http://money.cnn.com/2011/11/09/news/economy/jefferson_county_bankruptcy/index.htm.

6.
  Mary William Walsh, “In Alabama, a County That Fell Off the Financial Cliff,”
New York Times,
February 18, 2012, http://www.nytimes.com/2012/02/19/business/jefferson-county-ala-falls-off-the-bankruptcy-cliff.html?pagewanted=all.

7.
  Stephen C. Fehr, “Alabama’s Largest County Faces Bankruptcy Without State Help,”
Stateline,
August 22, 2012, http://www.pewstates.org/projects/stateline/headlines/alabamas-largest-county-faces-bankruptcy-without-state-help-8589941276.

8.
  “NY’s Cuomo Warns Localities Not to Expect State Bailout,”
Reuters
, September 11, 2012, http://in.reuters.com/article/2012/09/10/usa-newyork-cuomo-idINL1E8KAFRM20120910.

9.
  U.S. Department of Commerce, U.S. Census Bureau; Federal Housing Finance Agency, House Price Index, MSA HPI Comparisons, Stockton, CA, http://www.fhfa.gov/Default.aspx?Page=216&Type=compare&Area1=44700&Area2=&Area3=.

10.
  Steven Malanga, “How Stockton, California Went Broke in Plain Sight,”
Wall Street Journal,
March 30, 2012, http://online.wsj.com/article/SB10001424052702303404704577309231747497906.html.

11.
  Sydney Evans, Bohdan Kosenko, and Mike Polyakov, “How Stockton Went Bust: A California City’s Decade of Policies and the Financial Crisis That Followed,” California Common Sense, http://www.recordnet.com/assets/pdf/SR1474619.PDF.

12.
  Bob Deis, “A Message from the City That Went Bankrupt,”
Wall Street Journal,
September 27, 2012, http://online.wsj.com/article/SB10000872396390443995604578002200588578188.html.

13.
  Mary Williams Walsh, “How Plan to Help City Pay Pensions Backfired,”
New York Times,
September 3, 2012, http://www.nytimes.com/2012/09/04/business/how-a-plan-to-help-stockton-calif-pay-pensions-backfired.html?pagewanted=all; EconStats, “OFHEO House Price Index,” http://www.econstats.com/ofheo/ofheo_q70.htm; “Why Stockton, California is a Sister City to Buffalo, NY,”
Get Real Buffalo,
March 31, 2012, http://getrealbuffalo.blogspot.com/.

14.
  Louis Sahagun, “Mammoth Lakes Files for Bankruptcy,” L.A. Now,
Los Angeles Times,
July 2, 2012, http://latimesblogs.latimes.com/lanow/2012/07/mammoth-lakes-bankruptcy.html.

15.
  Ryan Hagen, “San Bernardino City Attorney: Evidence of Budget Falsification Given to Other Agencies,”
Daily News Los Angeles,
July 12, 2012, http://www.dailynews.com/news/ci_21052495/breaking-news-san-bernardino-mayor-morris-addresses-citys.

16.
  “City Budget Deficit Falls to $300 Million,”
CBS Chicago,
September 24, 2012, http://chicago.cbslocal.com/2012/09/24/city-budget-deficit-falls-to-300-million/; Kristen A. Graham, “Phila. School Budget Gap Grows by at Least $37M,”
Philly.com,
July 8, 2012, http://articles.philly.com/2012-07-08/news/32578414_1_tax-collection-plan-property-tax-appeals-delinquent-taxes; Alice Walton, “Los Angeles Maintains Credit Ratings Despite Fiscal Concerns,”
89.3 KPCC Southern California Public Radio,
June 18, 2012, http://www.scpr.org/blogs/news/2012/06/18/6673/la-maintains-credit-ratings-despite-concerns/.

17.
  Institute for Illinois’ Fiscal Sustainability, “What Are the Rhode Island Pension Reforms?” April 19, 2012, http://www.civicfed.org/iifs/blog/what-are-rhode-island-pension-reforms.

Chapter 10: The Way Forward

1.
  Meredith Whitney and Steve Kroft,
60 Minutes
, CBS News, aired on December 19, 2010; James Jacoby, “State Budgets: The Day of Reckoning,” CBS News, December 19, 2010, http://www.cbsnews.com/8301-18560_162-7166220.html?pageNum=4.

2.
  Robert Slavin, “Muni Defaults Up 111% and Down 38%, Depending on Data,” as quoted in
Bond Buyer,
April 2, 2012, http://www.bondbuyer.com/issues/121_64/muni-defaults-2012-up-and-down-1038128-1.html.

3.
  Beth Fouhy, “New Govs Take Office Amid Historic Budget Crisis,”
Bloomberg Businessweek
, December 20, 2010, http://www.businessweek.com/ap/financialnews/D9K7QCI01.htm.

4.
  Steven Gray, “Can Drastic Measures Save the Cash-Strapped States?”
Time
, January 20, 2011, http://www.time.com/time/nation/article/0,8599,2043086,00.html.

5.
  Judy Lin and Shannon McCaffrey, “State Budgets: Year Ahead Looms as Toughest Yet,”
Huffington Post
, January 15, 2011, http://www.huffingtonpost.com/2011/01/15/state-budgets-year-ahead-_n_809521.html.

6.
  William Selway, “U.S. Mayors Say Bond Defaults Likely Amid Strain,” Bloomberg, January 19, 2011, http://www.bloomberg.com/news/2011-01-19/cities-may-default-on-borrowings-amid-financial-strains-u-s-mayors-say.html.

7.
  Ray Gustini, “Will Jerry Brown’s Budget Save California?”
National Journal,
January 11, 2011, http://www.nationaljournal.com/dailyfray/will-jerry-brown-s-budget-save-california--20110110?mrefid=site_search.

8.
  Paul Egan and Steve Neavling, “Detroit’s Debt Crisis Even Worse Than Thought, State’s Review Reveals,”
Detroit Free Press,
December 22, 2011, http://www.freep.com/article/20111222/NEWS01/112220519/Detroit-s-debt-crisis-even-worse-than-thought-state-s-review-reveals.

9.
  Jack Lessenberry, “Missing Headline: Detroit Jumps Off Fiscal Cliff,”
Dome,
December 14, 2012, http://domemagazine.com/lessenberry/jl121412.

10.
  Michael Corkery, “Muni Blues Worry Investors,”
Wall Street Journal,
July 25, 2012, http://online.wsj.com/article/SB10000872396390443295404577545362747435078.html.

11.
  Jon Birger, “Word on Orange County Streets Is No New Sales Tax, Lebenthal Finds (Jim Lebenthal of Lebenthal and Co.),”
Bond Buyer
, June 26, 1995, http://www.highbeam.com/doc/1G1-17138068.html.

12.
  U.S. Department of Commerce, Bureau of Economic Analysis, Regional Economic Accounts, GDP and Personal Income Gross Domestic Product by State, http://www.bea.gov/iTable/iTable.cfm?reqid=70&step=1&isuri=1&acrdn=1#reqid=70&step=1&isuri=1.

13.
  Stanley Reed, “High Energy Costs Plaguing Europe,”
New York Times,
December 26, 2012, http://www.nytimes.com/2012/12/27/business/energy-environment/27iht-green27.html?_r=0.

14.
  United States Department of Agriculture, “USDA Agricultural Projections to 2021,” February 2012, http://www.usda.gov/oce/commodity/archive_projections/USDAAgriculturalProjections2021.pdf.

15.
  Jon Birger, “The Great Corn Gold Rush,”
CNNMoney,
March 30, 2007, http://money.cnn.com/2007/03/29/magazines/fortune/corn_gold_rush.fortune/index.htm.

16.
  Federal Housing Finance Agency, “News Release: U.S. House Prices Rose 1.8 Percent from First Quarter to Second Quarter 2012,” news release, August 2012, http://www.fhfa.gov/webfiles/24216/q22012hpi.pdf.

17.
  Moana Howard, “The Booming Business of Worker Accommodations,”
Permian Basin Petroleum Association,
August 3, 2012, http://pbog.zacpubs.com/the-booming-business-of-worker-accommodations/.

18.
  Dan Kraker, “$78M Airport Terminal Opens in Duluth,”
MPR News,
January 13, 2013, http://minnesota.publicradio.org/display/web/2013/01/12/regional/airpot-terminal-opens-duluth.

19.
  John Stearns, “Demolition Begins at Site of New Airport Terminal,”
Wichita Business Journal,
October 9, 2012, http://www.bizjournals.com/wichita/blog/2012/10/demolition-begins-at-site-of-new.html.

20.
  Linda Cunningham, “Texas’ New P3 Toll Road Project Open to Traffic,”
Infra Insight,
October, 24, 2012, http://www.infrainsightblog.com/2012/10/articles/tollroadsturnpikesmanaged-lane/texas-new-p3-toll-road-project-open-to-traffic/.

21.
  Tim Jones, “Bleeding Kansas Shows Peril of GOP Bid to End Income Tax,”
Bloomberg,
January 24, 2013, http://www.bloomberg.com/news/2013-01-25/kansas-bonds-left-behind-highlight-risks-of-levy-cuts-taxes.html.

22.
  North Carolina Community College System, “Final Summary Report: JobsNOW: ‘12 in 6’ Project,” September 2011, http://www.aging.unc.edu/programs/readiness/liaisons/2012_0127/documents/JobsNOW%20Report.pdf.

23.
  National Education Association, “2012 Handbook,” 2012, http://www.nea.org/assets/docs/nea-handbook.pdf.

24.
  Chuck Reed, in conversation with Meredith Whitney, July 24, 2012.

25.
  Joel Millman, “Towns Cut Costs by Sending Work Next Door,”
Wall Street Journal,
July 25, 2012, http://online.wsj.com/article/SB10001424052702303612804577531543876815920.html.

The page numbers in this index refer to the printed version of this book. To find the corresponding locations in the text of this digital version, please use the “search” function on your e-reader. Note that not all terms may be searchable.

Adjustable-rate mortgages (ARMs), 39–41

Greenspan as proponent of, 38–39

types of, 41

Agriculture

boom in central corridor states, 199

U.S. historical view, 20

Alabama

Jefferson County bankruptcy, 65, 187–89

poverty level in, 141

unemployment, 169

Alaska

employment growth, 169

zero state income tax, 165–66

American Dream, components of, 31–32

American Recovery and Reinvestment Act (ARRA) (2011), 67–69, 140, 202

Arizona

home price decline, 47–48

housing boom in, 45–47

population inflow to, 82

poverty level in, 141

privatization of services, 69–70

public safety–related cuts, 131

unemployment, 169

unfunded pension fund, 102

Arkansas, poverty level in, 137, 141

Asset sales.
See
Privatization

Atlanta, housing bust impacts, 87–88

Automobile industry

boom-and-bust cycle, 23–25

natural gas as fuel, 161

postrecession rise of, 17, 171

Balloon payment loans, 33

Bank of America, 41–42

Bankruptcy.
See
Municipal bankruptcy

Bear Stearns, 4–5, 47

Bernanke, Ben, on restrictive lending, 49

Bonds.
See
General-obligation bonds; Municipal bonds;Pension-obligation bonds

Boom towns, to ghost town transition, 19–20, 25

California

ARRA money, inappropriate use of, 68

bankrupt municipalities, 60–61, 113–14, 186–87, 189–93

boom-time spending excess, 46, 56, 60–61

consumer credit collapse, 75, 80, 86

consumer debt problem, 74, 80, 83–85

debt per capita in, 162

education cuts, 121–24

home price decline, 47–48, 80, 87, 190

home price escalation, 163, 189

housing boom in, 44–46, 79, 82–83

hydrocarbon reserves, potential for, 158–59

negative business environment, 158–59, 177

negative equity in, 79, 162

population flight from, 9, 27–29, 63–64, 157, 163–64, 168, 177

poverty level in, 141

privatization of services, 69

property-tax capping in, 61–62, 132, 171

public employees, excess payments to, 60–61, 89–91, 105, 132, 189

public safety–related cuts, 129–30, 190

small businesses collapse, 79–80

state government indebtedness, 80

subprime mortgage excess in, 82–83

tax rate hike, 9, 166

tax receipt declines, 27–28

tax receipts outpaced by spending, 62

tax revenues, drop in (2008– ), 27

technical/scientific fields decline, 28, 176–77

unemployment, 28, 47, 63–64, 68, 80, 143–44, 164, 177

unfunded pension fund, 102

welfare assistance spending, 138–39

California Public Employees Retirement System (CalPERS), 61, 190

Canada, mortgage loans in, 35–36

Central corridor states, 155–62.
See also
specific states

agriculture boom in, 199

bids to lure business/people to, 171–81

consumer credit gains in, 76

consumer debt, lack of, 84

corporations moving to, 63–64, 156–57, 166–68, 170–80

debt-to-income per capita (2011), 81, 162

economic boom in, 63–64, 109–11, 155–62, 198–201

education spending increase, 132–33

financial stability of, 7–8, 29, 75–76, 109–10, 178–80

as future economic leaders, 157–58, 198–201

jobs/employment growth in, 8, 63–64, 155–62, 167–73

manufacturing revival in, 8, 17–18, 25, 109

oil and gas production, 158–61

population inflow to, 27–29, 63–64, 110, 157, 163–64

small business growth in, 162

tax rate cuts in, 201

Chicago, consumer credit collapse, 75

Citigroup, 4

Coal industry, 23

Coastal states.
See also
Housing-bust states

population flight from, 27–29

real estate asset inflation in, 26

Community Reinvestment Act (1994), 43

Connecticut

library cuts, 126–27

population flight from, 176

tax rate hike, 69, 176

unfunded pension fund, 102

Construction companies, unemployment problem, 80, 142–43

Consumer credit

creditworthiness and homeownership, 73–74

new lenders, types of, 85–86

unused lines as safety net, 76–77, 83

Consumer credit cuts, 76–80

economic disruption from, 7, 76–77, 79

limit on access to (2007– ), 5–7, 10, 50, 75–77

small businesses, impact on, 45, 79–80

Consumer debt

in central corridor states, 84

credit cards, amount on (2008), 75

debt per capita in states, 81, 83–85

home-based debt.
See
Home-equity loans; Mortgage loans

and homeowners, 45, 74–75

most overburdened states, 6–7, 74, 80, 83–85

Corporations, move to central corridor states, 63–64, 156–57, 166–68, 170–80

Cotton production, 20

Countrywide, 40, 41–42

Credit, consumer.
See
Consumer credit;Home-equity loans; Mortgage loans

Debt, consumer.
See
Consumer debt

Demographics.
See
Population shifts

Detroit

boom-and-bust cycle, 23–25

population flight from, 181

Dot-com crash, 37–38, 59

Down payments, 33

Downsizing, as financial rescue, 145–46, 150

Dumb money, 167

Economic multiplier effect, 43–44, 50, 80

Education cuts, 119–24.
See also
specific states

extent in U.S., 73, 119–20

forms of, 58, 121–22

higher education, as discretionary expense, 119–20, 122

parental choices, 120

and tuition cost increase, 123

Employment.
See also
Job creation

in central corridor states, 8, 63–64, 155–62, 167–73

during housing boom, 43–44

losses after crash.
See
Unemployment

inright-to-work states, 166–67

European Union (EU), privatization in, 147–48

Fannie Mae, 36–37, 43

Federal Deposit Insurance Corporation (FDIC), 36

Federal government

federal-to-state money transfers, 67–69, 70

fiscal cliff, 140

homeownership, promotion of, 33–39, 42–43, 50–51

poverty-related assistance, 138–40

Federal Housing Authority (FHA), 34, 35, 36

Financial collapse (2007– ).
See also
specific topics

and consumer credit collapse, 5–7, 10, 50, 75–77

financial industry losses, 4–5

and irresponsible lending practices.
See
Housing bust;Mortgage-backed securities; Subprime loans

loan originators, collapse of, 41–42

and poverty, 135–45

recovery, regional differences, 8, 156, 165–73

retirement plan losses, 94, 97

and state/local governments.
See
Central corridor states;Housing-bust states; Local governments; State governments

stock market losses (2008), 94

and unemployment, 7, 9, 141–44

Fire department cuts, 131

Fiscal cliff, 68, 140

Florida

bid to lure business/people to, 174–76

boom-time spending excess, 57

consumer credit collapse, 75

education cuts, 59

financial recovery tactics, 175

home price decline, 47–48

housing boom in, 44–47

population inflow to, 168

poverty level in, 137, 141

tax receipts outpaced by spending, 63

unemployment, 141, 143–44, 169

welfare assistance spending, 139

zero state income tax, 165–66, 175

Flyover states.
See
Central corridor states

Food stamps, 138, 144

Freddie Mac, 37

Gambling, 69

General-obligation bonds.
See also
Municipal bonds

new issues (2010– ), 70–71

Geographic mobility.
See
Population shifts

Georgia, housing bust impacts, 87–88

Ghost towns, 19–20, 25

Global view

homeownership/mortgages, 35–36

privatization of services, 146, 147–48

U.S. as global competitor, 17, 161

Golden West Financial, 40, 41

Governmental Accounting Standards Board (GASB) rules, 53, 91, 95

Government-sponsored enterprise (GSE), 36–37

Great Depression, 6, 33

Great Recession.
See
Financial collapse (2007– )

Greenspan, Alan

connection to securitization, 39

interest rate cuts by, 38

as proponent of ARMs, 38–39

Home-equity loans

during boom, 74

inappropriate use of, 43, 46

limited access, post–2007, 76–77

small business use of, 7, 79

Homeownership

during boom, 43, 44, 45, 73

and creditworthiness, 73–74

economic multiplier effect, 43–44, 50, 80

federal government promotion of, 32–43, 50–51

global view, 35–36

Home Owners’ Loan Corporation, 34

Home price decline

negative equity created by, 7, 79, 86, 108, 162

and property taxes, 78–79, 88

reverse wealth effect, 88

states with highest rate, 47–48, 80, 87

Homestead Act (1862), 32

Housing boom, 43–47

booming states, 26, 44, 82

consumer debt during, 45

economic era of, 25–26, 44–47

economic ripple effect of, 43–44, 81–83, 143

homeowner misperception during, 46

home price escalation, 44–45

irresponsible lending during.
See
Subprime loans

new homeowners, statistics on, 43, 44, 45, 73

property tax increase during, 81–82

and retirement age buyers, 18–19, 26

state spending excess during, 9–11, 46, 49, 56–63, 81–82

Housing bust, 47–51

and consumer credit collapse, 5–7, 10, 50, 75–77

home price decline, 47, 75, 78–79, 88

loan originators, collapse of, 41–42

negative equity created by, 7, 79, 108, 162

progression of, 47, 82

states, overall impacts on, 6–11, 49, 57–59, 88

states negatively impacted.
See
Housing-bust states

states not affected by.
See
Central corridor states

and unemployment, 7, 9, 142–44

Housing-bust states. See also specific states

bankrupt cities/municipalities, 186–93

debt per capita in, 81, 83–85, 162

Greek crisis compared with, 116

list of, 6–7, 26, 44

population flight from, 27–29, 63–64, 157

public services decline in, 9, 10–11, 26–27, 110

states with contraction versus collapse, 87

assubprime-loan targets, 7

total liabilities (2011), 111–13

Illinois

consumer debt, average in, 169

debt per capita in, 96

education cuts, 123

pension-obligation bond debt, 103–4

tax rate hike, 9, 69, 173

Indiana

bid to lure business/people to, 172–74

consumer debt, average in, 169

corporations moving to, 171

debt per capita in, 96

education spending increase, 132–33

financial recovery tactics, 145–46, 149–50, 174

mobile capital investment in, 169

privatization of services in, 145–46, 149–50

Industrial Revolution, 20–22

Infrastructure

new, in central corridor states, 200–201

privatization of services for, 145–46, 147–48

Iowa

consumer credit gains in, 76

economic boom in, 109, 156, 180

Jefferson County (Alabama) bankruptcy, 65, 187–89

Job creation

in bad economy, 202–3

and job training, 144–45, 202–3

and privatization, 145, 149

Job training

cuts to programs, 124, 140

necessity for, 144–45, 202–3

JPMorgan Chase, 41

Kentucky, poverty level in, 141

Las Vegas

home price decline, 108

housing boom in, 107–8

population flight from, 181

subprime mortgage excess in, 86

Lehman Brothers, 47

Libraries, cuts and closings, 124–27

Local governments

programs/services cutbacks, 55

property tax hikes, 66, 69

public service delivery by, 66

revenue, sources of, 64, 66

state government transfers to (2010), 67

state revenue cuts to, 55, 64, 72, 110

Lottery laws, 69

Louisiana

corporations moving to, 173

economic boom in, 156

employment growth, 169

oil and gas production, 159

personal income growth in, 159

poverty level in, 137, 141

Mammoth Lakes (California) bankruptcy, 114, 190–91

Manufacturing jobs

decline of, 5

rise in central corridor states, 8, 17–18, 25, 109

Maryland, tax rate hike, 69

Massachusetts

boom-and-bust cycle, 20–23, 25

boom-time spending excess, 58

education cuts, 58

Medicaid

federal aid to states for, 138

increase in enrollees/expense, 59, 65, 119

Michigan

education cuts, 123

emergency management measures, 114, 140–41

library closings, 125–26

poverty level in, 137

welfare assistance spending, 139

Mississippi

boom-and-bust cycle, 20, 32

poverty level in, 135–36, 141

tax-supported liabilities of, 136

Mobile capital investment, 169

Mortgage-backed securities

collapse of market, 3–6, 48

creation and sale of, 2–3, 40, 82