State budget woes - is there any sunshine from this? any long ideas?
We all know now that individual states are really suffering. The latest headline from AP: State's budget woes will outlast the recession In the short-term, the massive stimulus will help balance budgets and keep key services, such as Medicaid, going. But economists agree the money will not quickly eradicate high unemployment, low consumer spending or distress in the housing market -- the triple threats behind a nationwide tax-collection shortfall that is expected to drag on even after the economy begins to rebound. story link here
I'm always looking for the long ideas in a story, but I'm hardpressed to find them here. I think I know a few, but I'm wondering if you all have any. Here's what I've got:
Schools / Paid Education
Clearly states are having to cut funding to universities, and Corinthian College (COCO), ITT Tech (ESI), etc etc are all benefitting from this. But the stock prices reflect a lot of growth already. So, next?
With states desperate to raise revenues, the siren song of the gambling industry may be more than many states can resist. A Harrah's coming to Phoenix soon? How about Miami? Even New York? Who knows, but some places are going to get into this game that aren't already. Beneficiaries to be the unbelievably beaten down WYNN? LVS? If they're building casinos, they might not benefit for a year. But what about internet gambling? Barney Frank has publicly stated as recently as a couple weeks ago in a Financial Times interview that he would be pushing hard to legalize internet gambling. Who might benefit? GIGM? CRYP? Careful out there, do some due diligence - CRYP is low for a reason. Seriously, any ideas?
Legalized Pot Growing? Selling?
Perpetually poor Kentucky's largest crop is Marijuana, second is Tobacco. California has a huge number of growers. Both these states don't profit from a tax on these crops, because they're not legal. Again, the pressure of economic crisis may change some minds. I'm not the first one to think of this - just check out Google News.
Here's one story from the San Jose Mercury News Altogether, tax revenue would be on the order of $1 billion, comparable to the cigarette tax.
Or this story from AFP "US states mull weed to ease deficit pain" Over the last few months NORML has been drafted to work with state lawmakers -- even in conservative locales like Texas -- on budgetary analysis and review how legalization may enable governments fill yawning deficits.
This one has me perplexed. What's the long play on this? Who benefits from legalized marijuana and increased state tax revenue. Someone suggested to me the logical folks to benefit - the companies with relationships with farmers, distributors in place, relationships with retail outlets are the tobacco companies. MO? RAI? LO? What about the smaller companies like STSI and VGR? or maybe the growers like UVV? What do you think? Who benefits?
States are going to be desperate for increased revenue. Where else are states going to turn?