Just as the United States is suffering from a massive deficit, so too are many of the individual states. Newsweek recently put forth an interesting hypothesis: overpaid lawmakers as a causal factor. This is based on the fact that the ten states that pay the lawmakers the most have deficits 12% higher than those of the ten states who pay the least. As a specific example, California pays its legislators a generous $95,000 and current has a $23 billion deficit. As another example, New York pats $75,000 and has a $9.2 billion shortfall.
Of course, lower pay for lawmakers would have a direct and obvious impact on public spending: if they are paid more, then the state has to spend more. If they are paid less, well the impact is obvious. However, these salaries are probably not the major factor in the deficits.
It might be the case that the deficit and the salaries are the result of an underlying cause or causes rather than one being a cause of the other. One likely possibility is the view the citizens of a state have towards public expenditures. For example, California is often cast as a state whose citizens favor spending public money. This would explain both the higher salaries for politicians and the higher deficit. States whose citizens are less prone to such expenditures would tend to have both lower salaries and lower deficits. The view the citizens have of taxes would also be a factor as well.
Another factor worth considering is the nature of the states. For example, California and New York are both well known for having very expensive places to live. As such, it would make sense that they would have higher salaries. The cost of living also seems to be linked to factors that would require more public expenditures, such as large cities, lots of infrastructure, and so on. As such, these states would be more costly to run. Of course, they should also generate more revenue. Unless, of course, the states are less inclined to tax.
It is also worth considering how efficiently and honestly the states spend money. If a state budget is laden with pork, then they would tend to have deficit problems as well.