Michigan will train 45 "financial emergency managers" to deal with an "expected surge of communities or school districts facing insolvency," the Detroit Free Press reports. The state treasurer says three or four communities are on the brink of insolvency and may not be able to pay their employees next month.
State and local governments cut 237,000 jobs over the past year, according to the latest jobs numbers. The cuts are likely to continue.
Governors are choosing spending cuts over tax hikes, the WSJ reports. Many states will likely see cuts in Medicaid (which provides health insurance for the poor, and is funded jointly by states and the federal government), along with funding cuts for state universities and job cuts at state agencies.
States would be able to declare bankruptcy under legislation being considered in Congress, Bond Buyer reports. Even talk of such a thing makes governors nervous. In a recent letter to Congressional leaders, the National Governors Association wrote that "the mere discussion of legislation, let alone the existence of a law allowing states to declare bankruptcy would only serve to increase interest rates and create more volatility in bond markets."
A Congressional committee wants to hear from Meredith Whitney, the analyst who went on 60 Minutes and predicted 40 to 50 municipal defaults on hundreds of billions of dollars in debt. Whitney doesn't want to appear, according to Fox Business.
The news isn't uniformly grim. State tax revenues are up in Massachusetts, Pennsylvania, Indiana, Hawaii, Missouri, Arkansas, West Virginia and Virginia, according to Carpe Diem, which includes links to stories about each state.
Correction: An earlier version of this post incorrectly referred to Fox Business as "Fox Business News."