It’s fun spending other people’s money—at least until the money starts running low. That’s pretty much the position a lot of state lawmakers are in.
While the good times rolled, right up through most of 2007, states had no trouble finding ways to spend the revenues that came their way: on schools, roads, health care, jobs, tax breaks and the like.
Unfortunately, good times don’t roll on forever. The National Conference of State Legislatures (NCSL) predicts that 23 states face budget shortfalls—nearly $50 billion—in 2009.
It’s easy enough to understand why revenues quit soaring: subprime mortages, gasoline prices, food prices and layoffs, all leading to a slowing economy.
Now legislators have to figure out what to do. Raise taxes? Taxpayers never appreciate that. Cut spending and programs? That’s tough, too. But, unlike Congress, most states must balance their budgets, so something has to be done.
- New Jersey just cut spending across the board, shedding 2,100 state employees, and eliminated two cabinet-level agencies. That’s a good start!
- Nevada’s governor called for 4 percent cuts in all state agencies, on top of reductions earlier implemented, and depleting the reserve fund by $267 million. Better, in our view, to target the cuts, but across-the-board will work.
- California, with a projected $17 billion shortfall, doesn’t know yet what it will do. Gov. Arnold Schwarzenegger (R) hopes the state’s lottery program will float a loan. Wanna bet?
Nobody enjoys spectacles like these. Good programs, good people get hurt when the budgetary buzz saw starts up. But forgive us if our sympathy is targeted towards those who are hurt by the cuts, not the legislators.
In the late 1990s, state coffers were overflowing, so state legislators started spending like drunken . . . well, politicians. When the dot.com bubble burst, the legislators had to cut.
They didn’t learn their lesson. In the past few years they went on a spending spree again, and now its time to address the shortfalls . . . again.
The best solution isn’t raising taxes or hightailing it to Washington hat in hand hoping the feds will bail the states out—Congress has its own overspending problems—but cutting back on the additional spending. Yes, it will hurt. But maybe these fair-weather legislators will learn that when the good times return, as they surely will, they’ll resist the urge to let the good times roll.