"It's the most dire situation we've seen in over 20 years, " laments Raymond C. Scheppach, executive director of the National Governors' Association. He's talking about the deficit faced by many states.
The Washington Post reported last Sunday (Jan. 19) that many Republican governors are proposing tax increases to close the gap and abide by their state constitutions which require balanced budgets. Many, including Idaho Gov. Dirk Kempthorne, say they've cut expenses as much as they can and will now have to raise taxes. Kempthorne says, "I'm not going to dismantle this state, and I'm not going to jeopardize our bond rating, and I'm not going to reduce my emphasis on education. "
He is joined in his taxing proposals by other Republican governors, including Mike Huckabee of Arkansas, Sonny Perdue of Georgia (the first Republican governor since Reconstruction) and Connecticut's John Rowland. The message is the same: We can't cut anymore, and the taxpayers will have to pony-up additional money to feed the government beast.
Not so, says the Idaho Statesman newspaper. A Jan. 10 editorial notes that many "cuts " in government programs are really reductions in increases previously approved by the legislature. Education in Idaho, for example, will receive more money than in the previous year, but not as much as the legislature had promised before the economic downturn. Kempthorne has announced he will forgo a salary increase and reduce the expenditures for his office (saving $100,000 out of a budget of $14 million). The Twin Falls (Ida.) newspaper thinks that's an example worth emulating. An editorial suggests a graduated pay cut of 1 to 5 percent "may be the easiest and fairest way to fix state shortfalls. " Those who make more should take the bigger hit, recommends the paper. When the economy improves, it says, salaries could be restored to present levels.
The problem for states is a familiar one. During good economic times, they spend money. When a downturn comes, they cry about the "pain " of budget cuts and propose tax hikes. But when taxes are raised, businesses often leave and take jobs with them, creating a greater long-term problem than the one they were hoping to solve.
Colorado Republican Gov. Bill Owens has the right approach. During the booming 1990s, Owens held down spending and rebated more than $6 billion to state taxpayers. The state flourished, and as a result, Colorado's budget troubles are far less severe than other states.
The American Legislative Exchange Council and the Manhattan Institute for Policy Research have published an essay called "Show Me the Money: Budget-Cutting Strategies for Cash-Strapped States " (www.alec.org). They include reducing the size of government: "State employees' salaries and benefits account for a significant portion of states' costs. Most states will find it almost impossible to balance their budgets without impacting state employees. "
The essay also recommends selling state-owned enterprises and assets, such as airports, stadiums, ports, utilities, liquor operations, buildings, land and gas and electric utilities; competition in the delivery of services; a reduction or elimination of programs that perform poorly (why should any government program be allowed to live forever if it doesn't work?); rewarding employees for saving money, not spending it (a member of the Bush administration recently told me her department saved several billion dollars and when it tried to give it back to the Treasury, Congress demanded the money be spent); create cost-cutting brigades to allow state budgets to be examined and reformed by experts.
This last proposal is what Texas did in the early 1990s. It assembled more than 100 of the best budget analysts, auditors and number crunchers. They came up with more than 1,000 recommendations and identified more than $2.4 billion in budget savings, ending the budget crisis and averting the need for a state income tax.
That's the approach states should take before asking taxpayers to contribute more of their money to government. For Republicans to be suggesting taxes should be raised eliminates the need for a Republican Party. If Republicans behave like Democrats, it would be better to vote for the real thing and spare us the disappointment.