State budgets are in crisis yet again. In addition to the usual suspects (NJ and IL) add Nevada to the list. As one of the prime beneficiaries of the housing bubble it's not surprising to see Nevada's economy implode with the housing bust. What New Jersey and Illinois have done with their tax windfalls last go around is a topic for another posting. Regardless of how they got here, the sad truth is these states need to close the gap. Spending cuts are unlikely as usual so look for tax hikes on the politically palatable such as casinos.
- New Jersey, Illinois, and Nevada lead the way in total dollar deficits projected for 2009. In terms of per capita deficit though, Nevada looks to be in the worst shape, followed closely by New Jersey, then Illinois and surprisingly, Iowa. Considering the recent floods Iowa (and Missouri) might be in even worse shape. Indiana and Louisiana are actually projecting surpluses.
- Throughout the history of legalized casinos, the states have raised gaming taxes nine times including three times by Illinois. No other state raised taxes more than once. A closer look at the timing of these tax hikes reveals that 7 out of the 9 increases occurred during the last state budgetary crises of 2002-2003. That piece of history doesn't bode well for the industry currently. Whether legislators wish to tackle this issue during an election year or wait until next year will be an interesting follow. In any event, we've got our eyes on this developing trend.