Sunday, April 17, 2011

Narrowing the Divide: Gaps forcing governors to forsake party to find budget balance.

In 2010 there were 26 freshman among the 37 women and men elected to governor's offices in the midterms -- meaning more than half of our state chief executives were new to the job. They took office as 44 states were reporting budget deficits for FY 2012 in excess of $110 billion[1].

This harsh reality has forced many governors – especially Democrats – to forsake their particular ideology around taxes and spending, with many executive budgets calling for draconian spending cuts for state budgets.

A New York Times analysis of 2010 gubernatorial inaugural addresses discovered a theme common to Republicans and Democrats alike: governors were “girding residents for a rocky road ahead — a path they seemed to sense residents may not yet grasp, given headlines of improvements in other parts of the economy[2].”

The articles author, Monica Davey, quoted Democratic governors John Kitzhaber (OR) and Andrew Cuomo (NY). Both sport well known liberal pedigrees (Kitzhaber, a two-term Oregon governor in the 1990s, expanded health care access for poor children and is a well known advocate for a national single payer health care system; Cuomo is the son of liberal lion and New York Governor Mario Cuomo, and served as HUD secretary for President Clinton) but sounded a cautionary reform message.

Kitzhaber, comparing the state to a fixer-upper, said, “There are too many rooms, and they aren’t the right size. There’s no insulation, and the windows are drafty. And the cost of keeping this house is more than the family can afford. The roof needs to be replaced, and the siding is falling off.” Cuomo likewise commented, “We must right-size the state government for today,” and said New York could not afford to be “the tax capital of the nation.” Both men have frustrated liberal supporters by proposing substantial cuts to state spending with little reliance on new revenues to balance budgets.

There appears to be reluctance to raise revenues through tax increases because of the sheer enormity of the shortfall. The New York Times, using Illinois’ tax hike of two percent, analyzed whether a similar move would solve the budget woes of New York ($10 billion FY2012 deficit/18.7 percent of budget), New Jersey ($10.5 billion FY2012 deficit29.3 percent of budget) and California ($25.4 billion FY 2012/37.4 percent of deficit). While such an increase would make New York solvent, California and New Jersey’s shortfalls would only be reduced by 50 percent[3].

If states are forced to cope with increasing budget shortfalls, and (most) governors remain committed to avoiding tax increases to cover the gap, there will be increasing pressure to cut those portions of state expenditure that make up the largest share of their budgets: K-12 education and Health and Human Services – especially Medicaid and Medicare[4].

No comments:

Post a Comment