by Calculated Risk on 7/02/2010 11:25:00 PM

A couple of stories ...

From the NY Times: Illinois Stops Paying Its Bills, but Can’t Stop Digging Hole

For the last few years, California stood more or less unchallenged as a symbol of the fiscal collapse of states during the recession. Now Illinois has shouldered to the fore, as its dysfunctional political class refuses to pay the state’s bills and refuses to take the painful steps — cuts and tax increases — to close a deficit of at least $12 billion, equal to nearly half the state’s budget.

Then there is the spectacularly mismanaged pension system, which is at least 50 percent underfunded and, analysts warn, could push Illinois into insolvency if the economy fails to pick up.

From the LA Times PolitiCal: Appeals court affirms Schwarzenegger's order to cut state workers' pay

A state appeals court ruled Friday that Gov. Arnold Schwarzenegger can reduce state workers' pay to the federal minimum wage when the state budget is late.

The ruling comes a day after the governor ordered the pay of nearly 200,000 state employees to be reduced to $7.25 an hour until a budget is passed ...

The state problems will be a drag on the economy for some time.

Employment posts today:

June Employment Report: 100K Jobs ex-Census, 9.5% Unemployment Rate for graphs of unemployment rate and a comparison to previous recessions.

Employment-Population Ratio, Part Time Workers, Unemployed over 26 Weeks with graphs - including recessions aligned at bottom.

Employment Report: Temporary Help and Diffusion Index

Fewest Teen Jobs added in June since 1951