The States Most Likely to Wind Up Like California

California's crippling deficit resulted from overspending, foreclosures, contradicting ballot initiatives, and a two thirds majority needed to pass a budget. But 48 states face deficits, and some are in real danger of falling into the same hole that the Golden State did.

NEW YORK
The state's revenues were hit hard by Wall Street's financial collapse, leading to a $20.1 billion deficit. It's a heavy spender on social services, too. With state senators busy turning off the lights and locking the Senate chamber doors, is there much confidence that the legislature is equipped to handle future crises?

FLORIDA
When home values shot up, property-tax caps prevented Florida from reaping the benefits. The state's $5.9 billion deficit wasn't as high as California's, but Florida has no income tax and foreclosures are eating away at revenues. Florida's 2010 budget diverted property taxes from schools—forcing school boards to raise taxes themselves.

NEVADA
Without an income tax, Nevada relies heavily on gaming revenues. No more. The state also has the highest foreclosure rate this year. To beef up the coffers, legislators passed new taxes—over the veto of Gov. Jim Gibbons—at the 11th hour. Had they missed the deadline, though, Gibbons could have killed the taxes in a special session.

ILLINOIS
Faced with a $13.2 billion deficit that was more than 47 percent of its total budget—the highest percentage after California—new Gov. Pat Quinn called for increased income taxes. His Democratic colleagues in the legislature shunned the idea, using stimulus funds and delaying vendor payments to get through the year.

ARIZONA
After squandering surpluses by lowering taxes, Arizona hadn't balanced its $4 billion deficit (41 percent of its total budget) a month after it was due. Lawmakers won't raise sales taxes, even as the state mulls selling its House and Senate buildings. Arizona, some economists say, may already be in worse economic shape than California.

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