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60 Minutes report highlights growing issues with state budgets nationwide
By Kyle Maichle
MILWAUKEE, Wisconsin: CBS News correspondent Jeff Kropf highlighted the growing issue of state budgets nationwide during the December 19, 2010, edition of 60 Minutes. The report highlighted how states are trying to fix their budget problems along with one Wall Street analyst who thinks that the worse is yet to come for state and local governments.
Merideth Whitney, a respected Wall Street Analyst, told 60 Minutes that a large-scale financial meltdown may be hitting state and local governments. Ms. Whitney described the crisis as having: "tentacles as wide as anything I've seen. I think next to housing this is the single most important issue in the United States, and certainly the largest threat to the U.S. economy." The analyst also said that state and local governments are being complacent in handling a potential large-scale financial crisis.
The ongoing budget crisis in Illinois was also featured in the 60 Minutes report. State Comptroller Dan Hynes told Kropf that the state faces $6 million in unpaid bills and is usually six months behind in paying its vendors. When asked about who is demanding money from the State of Illinois, Hynes said: "it's fair to say that there are tens of thousands if not hundreds of thousands of people waiting to be paid by the state...Pretty much anybody who has any interaction with state government, we owe money to." In addition to cutting social service programs, lawmakers have been kicked out of their offices due to the state not paying rent and gas station owners have refused to accept state-issued credit cards from state troopers when they fill up for gas.
Governor of New Jersey Chris Christie was also interviewed by Jeff Kropf. Kropf asked the Governor about New Jersey refusing to accept money from the federal government to build a rail tunnel with New York. Christie said: "I canceled it. I mean, listen, the bottom line is I don't have the money, And you know what? I can't pay people for those jobs if I don't have the money to pay them. Where am I getting the money? I don't have it. I literally don't have it." The Governor also warned that: "the day of reckoning has arrived. That's it, and it's gonna arrive everywhere. Timing will vary a little bit, depending upon which state you're in, but it's coming."
At the end of the report, Ms. Whitney also criticized state and local governments over the lack of transparency in its financial dealings. Whitney said: "the lack of transparency with the state disclosure is the worst I have ever seen. Ultimately we have to use what's publicly available data and a lot of it is as old as June 2008." With most local governments getting at least a third of their money from state aid, she thinks that municipal bonds held by local governments will be defaulted on if states continue drastic budget cuts. When concluding on the potential outcome, Ms. Whitney said that: "there's not a doubt in my mind that you will see a spate of municipal bond defaults."
- CLICK HERE for a transcript of the report.