December 01, 2011
Budget wonks will remember 2011 as the year state governments acquiesced
to the Great Recession’s fiscal realities.
Three years
after the arrival of hard times, governors, legislators, and revenucrats ran
out of options. They continued to expect a rapid economic turnaround, and as
always, hoped for more money from the D.C. cash machine. But assumptions and
pipe dreams were all that was left. Reserve funds? Drained. The Obama administration’s
“stimulus” largesse had slowed to a trickle. Further bonding for unemployment
payments and operating expenses was risky.
So actual cuts, not just stingier-than-desired increases in
expenditures, took hold this year. The rollbacks weren’t what they need to be, especially
given the
huge unfunded liabilities most states face. But a marquee stat suggests
that the restraint is real: The National Governors Association and National
Association of State Budget Officers
report
that 29 states “have lower general fund spending” in the current fiscal year --
which ends June 30, 2012 -- than “the pre-recession levels of fiscal 2008.”
Some of the moves toward right-sizing were on the thin side:
• California’s
solons gave up their subsidized vehicles, saving $285 per month, per pol.
Taxpayers seem cool with yanking the rides. “Not very many people have their
employers give them cars,” budget watchdog Robert Stern told The Sacramento Bee,
“and these are, after all, our representatives and they really shouldn’t be
getting perks that very few people get.”
• In April, the Texas Department of Criminal Justice eliminated
weekend lunches for the cons under its care. The prison system also replaced
carton milk with powdered milk and ditched hamburger and hot-dog buns for
slices of bread. One legislator fails to feel sympathy for complainers. “If
they don’t like the menu,” quipped State
Senator John Whitmire, “don’t come there in the first place.”
• Republicans in New
York’s Senate downsized their chamber. Jimmy Vielkind,
a reporter with the (Albany)
Times Union, enumerated the changes: “The
payroll had 1,132 people as of [October], down from a high of 1,503 in July
2010. Regional offices in Buffalo, Rochester, Syracuse, Long
Island and Albany
are all closed, and six departments have been consolidated into three.”
• New Mexico
capped the annual value of the tax credits it showers on film and television
productions at $50 million. Michigan
limited its giveaways to $25 million. Washington
let its program expire. (It’s not the end of states’ sleazy,
absurdly generous giveaways to a highly profitable industry, but it’s a start.)
Yet fiscal conservatives probed major cost drivers in 2011, too,
and frequently scored wins. Wisconsin
soaked up the bulk of the legacy media’s coverage of the compensation disparity
between government and private-sector employees, but less visibly, other states
stepped forward. Summer
saw the passage of higher worker contributions for retirement and healthcare in
New Jersey. As a “public” radio reporter put it, Rhode Island tackled its pension-driven budget
dilemma “by
hiking the retirement age, freezing cost of living adjustments, and moving
nearly half of current state workers’ contributions into a 401(k)-style plan.”
There was also good news on welfare. In a November
analysis, the far-left Center on Budget and Policy Priorities wailed, “California cut [Temporary Assistance to Needy Families] benefits
by 8 percent, New Mexico and Washington
by 15 percent, and South Carolina
by 20 percent, in nominal terms. (The cuts in inflation-adjusted dollars were
still larger.)” In July, Arizona
stopped Medicaid coverage for adults without children. “Michigan can no longer afford to provide
lifetime assistance,” a social-welfare bureaucrat told The New York Times, explaining that
thousands of her state’s cash-handout recipients had been on the rolls for over
a decade.
State colleges
and universities have long been sacrosanct -- rewarded with endless revenue, and
free from oversight and accountability. That may be changing. In October, Florida’s
chief executive penned a blunt letter that asked inconvenient questions of
the Sunshine State’s
university presidents. “Many … graduates are unable to find jobs in their field
of study,” wrote Governor Rick Scott, “and many employers are concerned that …
graduates are not equipped with the appropriate writing skills, critical
thinking skills and technical expertise needed to succeed.” Earlier in the
year, Governor
Jay Nixon proposed that subsidies to Missouri’s
higher-ed-industrial complex be linked to metrics such as completion rates and graduates’
performance on professional-certification tests.
Fixing state government -- getting it to stop doing the things
it shouldn’t, and start doing the things it should, affordably -- is sure to be
a lengthy conflict. Optimists can credibly argue that the battle has finally
begun.
D. Dowd Muska (www.dowdmuska.com) writes about government, economics, and technology. Follow him on Twitter @dowdmuska.
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