Why let California have all the fun? New York may not suffer from quite the subprime hangover it has, but the Empire State rivals the Golden one in the dysfunctionality of its budget. Now David Paterson, its governor, is warning that cash may run short before the year is out.

Like California, New York leans heavily on its wealthy residents to pay the bills and spent accordingly during the boom years. Some 40 per cent of income taxes come from the top 1 per cent of earners, but it has a particularly unfortunate crop of millionaires, made up largely of Wall Streeters. Towards the end of the boom, the state relied on them for nearly 20 per cent of its haul. After a temporary “millionaire’s tax” to help plug the budget hole last year, another increase is probably out of the question. With local taxes included, wealthy residents of New York City pay by far the highest marginal rates in the country.