State News Roundup
Get the latest intel on Washington's fiscal woes.Close
Virginia could be one of the states hit hardest by the looming ‘fiscal cliff,’ due to its high number of federal employees and contractors. A recent study by the Pew Center for States reported that Virginia could possibly lose up to $10 billion in economic activity and nearly 120,000 jobs if no Congressional action is taken. These projections have local businesses worried; central Virginia alone has almost 1,800 businesses that earn revenue from Department of Defense contractors. These businesses are in industries you might not think to associate with defense contracts, such as food production, office cleaning, manufacturing, and hotels. “Folks who are running a dry cleaning business or a car repair shop are also connected because their customers themselves are working for contractors,” explained Michael Cassidy, President of The Commonwealth Institute. According to NBC12, some businesses are waiting to see what happens and have no planned layoffs, while others are already preparing for cuts to staff and revenue.
While politicians and businessmen across the nation are hunkering down for the impending ‘fiscal cliff,’ developers and landowners in the District of Columbia aren’t stressing one bit. “Either way, we’re good,” said a local developer. “More regulations and more laws equal more lawyers and lobbyists. They are filling up every office building we can put up.” According to the Washington Examiner, the National Association of Realtors reported in November that the office vacancy rate in the D.C. region was at 9.6 percent, the lowest in the country. Developers are revamping neighborhoods investors wouldn’t dare help finance a decade ago, such as the Anacostia River waterfront by the Nationals Park and the Maine Avenue fish market. All of this new development will help increase the District’s revenue, further ensuring that it will not fall off the ‘fiscal cliff.’
According to New York state Comptroller Thomas DiNapoli, New Yorker’s are at risk of suffering over $43 billion in tax hikes in 2013 if an agreement isn’t reached on the ‘fiscal cliff.’ “There is real danger ahead for New York’s economy if America goes over the fiscal cliff,” DiNapoli said. In his report, DiNapoli predicted taxes would increase for practically all 8.9 million working residents, with an extra 3.4 million people having to pay the federal alternative minimum tax. The state and local governments would also lose a combined $609 million in federal aid.
This week, Michigan officials warned Detroit leaders that they may have to appoint an emergency financial manger if the city can’t get it’s debt and payroll issues under control. The oversight board appointed in April and charged with overseeing city officials on financial issues has not been able to repair the city’s fiscal woes as quickly as hoped. Moody’s Investors Service revealed that the city will most likely have to file for bankruptcy or default on an obligation over the next year or two. The ratings agency attributed problems to “the city’s ongoing inability to implement reforms necessary to regain financial stability.” To make matters worse, the New York Times reported Mayor Dave Bling and members of the Detroit City Council have been clashing over how to turn matters around.