New Jersey Governor Chris Christie said U.S. states face a “day of reckoning” as they contend with looming budget deficits in the wake of the longest recession since the 1930s.

By Terrence Dopp at Bloomberg.com

EXCERPTS:

“The day of reckoning has arrived,” said Christie, 48, a first-term Republican. Areas such as education and pensions “were third rails of politics. We are now left with no alternatives.”

The recession caused the biggest nationwide decline in state tax receipts on record, according to the nonpartisan Center on Budget and Policy Priorities in Washington. States have filled more than $425 billion in funding gaps since fiscal 2009; the combined imbalance is likely to reach $140 billion in the next budget year, the center said.

States’ fiscal stress may trigger a “spate” of defaults among local municipalities, Meredith Whitney, the banking analyst who correctly predicted Citigroup Inc.’s dividend cut in 2008, said in the same segment on “60 Minutes.”

“You could see 50 sizeable defaults,” she said. “Fifty to 100 sizeable defaults” amounting to “hundreds of billions of dollars.”

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