Wednesday, May 16, 2012

Many states using $2.5 billion mortgage settlement to solve budget woes.

Today the NY Times reported that "more than a dozen states...want to help close gaping [budget] shortfalls using money paid by the nation's biggest banks and earmarked for foreclosure prevention, investigations of financial fraud and blunting the ill effects of the housing crisis."  In other words, these states are not using the money to help homeowners, but instead to balance their budgets or pay down state debt.

According to a report by Enterprise Community Partners, 6 states are not using their funds for housing, an additional 9 states are only using part of their funds for housing, and 9 are still deciding. Who are the culprits?

Alaska, Georgia, Missouri, South Carolina, South Dakota and Virginia have designated or proposed to use about 98% of their combined $243 million for non-housing spending.  Georgia will use all $99 million for economic development, Missouri has has designated $40 million to "soften planned cuts to higher education," South Carolina has designated all $31 million to encourage businesses to move to the state, and Virginia has proposed all but $1 million to offset cuts to state and local government and give state employees a 3% raise.

Idaho, Indiana, Kansas, Maine, North Carolina, Nebraska, Utah, Wisconsin and West Virginia have designated at least $126 million (over 60%) of their total $203 million for state general funds.  Today, the Times reported that Texas sent $125 million into its state coffers, and that California will use the bulk of its $400 million to pay state debts.

Not to put a political spin on it, but of these 17 states, only 2 are designated "blue" by the last five presidential votes, with the other 15 either red or "purple."  We leave it up to you to decide whether this is typical of conservative government, but we submit that money sent to a state for a particular purpose should be used only for that purpose, and that states who fail to do so should have to pay all the money back.


  1. If you are outraged about that, I would think you would be outraged about this. Bruce Springsteen was collecting Farm Aid from New Jersey for his mansion.

    But then again, from watching both sides, Republican and Democrat during the election. The biggest "twisters of truth" were the Democrats NOT the Republicans.

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