State News Roundup

News Roundup | May 17, 2012

Wisconsin has seen a surge in its economy since the beginning of the year. Unemployment in the state has dropped from 7.7 percent to 6.8 percent, and property taxes have fallen for the first time in 12 years reports The Washington Free Beacon.  While Wisconsin has seen improvement in its economy, neighboring Illinois has seen trouble as a lack of spending cuts has pushed the state to near default. As Wisconsin undergoes its recall race for governor, the state is currently on track to run a $1.6 billion deficit for 2012, down from $3.5 billion the year before, and with minor cuts to teaching positions throughout the state. The recall elections will cost the state approximately $16 million according to the state Government Accountability Board.

As Wisconsin begins to see some recovery, other states are still struggling to meet shortfalls in their budgets. To cope with the shortfalls some states have turned to using housing aid capital meant for relieve struggling homeowners to plug their budget gaps. According to The New York Times, California, which is projected to run a $16 billion deficit in 2012, has joined more than a dozen states in using money awarded for foreclosure prevention, investigations of financial fraud, and blunting the effects of the housing crisis to fill budget gaps instead. Gov. Brown though has suggested using the $400 million California was awarded to pay the state’s spiraling debt instead of its intended purposes. The money originally was part of a national settlement of $25 billion between the states and five of the largest banks over abuses in their mortgage and foreclosure processes. So far only 27 states have devoted all the funds they received to housing programs, prompting Andy Schneggenburger, executive director of the Atlanta Housing Association of Neighborhood-Based Developers, to frame the move as “a real lack of comprehension of the depths of the foreclosure problem.”

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