Democrat-ruled US states have been forced to slash budgets as an exodus of well-paid residents slashes tax revenues.
Meanwhile, the big Republican 'red states' are booming as their populations see an uptick.
California, the most populous of the 50 states, has gone from a $100 billion public surplus in 2022 — when Governor Gavin Newsom began sending checks worth upwards of $1,000 to 23 million residents — to a $30 billion deficit in 2023.
California and New York, another 'blue' state with almost 20 million inhabitants, saw their populations drop by almost 300,000 from June 2021 to June 2022. Meanwhile, Texas and Florida, two major Republican states, attracted almost 900,000 new residents in the same period, according to the US Census Bureau.
One key factor in the shift is which taxes states levy to fund themselves. California relies on an income tax that is tapered from just 1% on the first $10,100 earnings above the $5,200 deduction to 12.3% on income over $677,000.
By contrast Texas and Florida rely more on sales tax — and have seen their receipts rise by 9% in Florida's case as Americans keep spending despite soaring inflation — which has only increased income from a tax based on a percentage of ticket prices.
Texas Governor Greg Abbott plans to take advantage of a $33 billion surplus to cut taxes in a bid to attract more investment to his state.
Another Democrat state suffering financial difficulties is the Pacific island chain of Hawaii, where Governor Josh Green had to cut $1 billion from the budget after tax income fell by a whopping 25% in April.
The state of New Jersey has also encountered money troubles, with State Treasurer Elizabeth Muoio expecting to take $1.1 billion less in taxes in 2023 than the year before. However, the Garden State is still pushing ahead with property tax relief for senior citizens, which is expected to cut revenues by $600 million over the next three years.