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”Shoots (News, Views and Quotes)”
– States Battle Budget Deficits
Author: John W. Skorburg
Published: The Heartland Institute 04/01/2003
The 2002 mid-term elections produced nearly two dozen new governors — the largest turnover in years. None of them, however, had long to celebrate victory. Their first day on the job coincided with one of the most pressing state fiscal crises in decades.
The latest budget figures released by the American Legislative Exchange Council (ALEC) show yawning state budget deficits. California’s $34.8 billion deficit leads the nation. In total, the top 10 states are at least $78.55 billion in debt. Total state budget deficits for fiscal years 2003-04 are now approaching $90 billion nationwide.
“These figures are simply staggering,” said Michael Flynn, ALEC’s director of policy and legislation. “But what’s more alarming is that few states have yet to responsibly address this self-inflicted crisis, a decade in the making, which finally hit home well over a year ago.”
Top 10 State Deficits 1 California $34.8 billion 2 New York $10.0 3 Texas $9.9 4 New Jersey $5.0 5 Minnesota $4.6 6 Ohio $4.0 7 Massachusetts $3.0 8 Wisconsin $2.6 9 Michigan $2.4 10 Illinois $2.25
ALEC is the nation’s largest bipartisan, individual membership organization of state legislators, with more than 2,400 legislator members representing all 50 states.
“Raising taxes or clamoring for a federal bailout is not the answer, and in fact will only perpetuate and deepen the current fiscal crisis,” said Flynn. “What’s required is a candid and sober evaluation of each state’s medium and long-term costs of operating government. It’s only by reducing the size and scope of government in strategic and imaginative ways that each state finds a way out of its woes.”
Strategies for Change
Recently, ALEC and the Manhattan Institute for Policy Research released a groundbreaking report on state budgets, “Show Me the Money: Budget-Cutting Strategies for Cash-Strapped States.” The report is a comprehensive evaluation of state budgets, offering 10 strategies for cutting state budget deficits, including short-, medium-, and long-term plans for reducing the cost of government.
The strategies offered by ALEC and Manhattan include reducing workforce costs, imposing broad-based spending cuts, reforming entitlement programs, selling or leasing government assets, introducing competition in service delivery, eliminating poorly performing programs, rewarding employees for saving money, using technology to slash overhead, and creating cost-cutting “brigades.”
According to the National Conference of State Legislatures (NCSL) cited in the ALEC study, states used the following actions to close budget gaps for their FY 2003 budgets: cutting spending (26), tapping state funds (23), using tobacco settlement funds (16), increasing taxes (16), tapping rainy day funds (12), and raising fees (10).
Examples of specific deficit-reducing actions noted in the ALEC study included cutting higher education spending (16 states), cutting corrections spending (14 states), tapping tobacco money (Pennsylvania and New Jersey, among others), increasing taxes (Indiana, New Jersey, Pennsylvania, and Tennessee), tapping rainy day funds (Alaska and Ohio), and raising fees (Rhode Island, Virginia, and Vermont).
“It is important to remember that no matter how successful state governments are in employing short-term measures to close deficits, the seed of fiscal crisis will remain. Only by fundamentally restructuring government will state policy makers be able to contain spending growth and return accountability to state finance,” notes the ALEC report. “The ten strategies will help states do both.”
Is California Taking the Wrong Path?
California’s 2003 legislative session began in January, as 120 lawmakers –including 32 newcomers — were sworn in, signaling the official start of the two-year session.
Normally, the ceremonial event would give way to a month’s vacation. But, because of the state’s budget shortfall, lawmakers will have little time to celebrate. Gov. Gray Davis has called a special session and is expected to ask the Democrat-controlled legislature to immediately slash up to $5 billion from the state’s current $76.5 billion general fund.
“There will be no real honeymoon period,” said Assembly Speaker Herb Wesson, a Los Angeles Democrat who faces the daunting challenge of cobbling together a bipartisan coalition in his 80-member house to support budget solutions that could include new taxes and cuts to social programs.
In many ways, the $5 billion in cuts is the least of the problems California lawmakers will face. Even if they figure out where to trim, they will still have to deal with next year’s budget … and grim estimates of at least another $15 billion shortfall.
Brian Wesbury, chief economist for Chicago-based bond trader Griffin, Kubik, Stevens & Thompson, says California is taking the wrong path. The state’s economy, he predicts, will lag behind the national economy in future growth–making it that much more difficult to deal with future budget deficits.
“Like so many other trends, the supply-side revolution actually began in California in 1978,” noted Wesbury, “when voters overwhelmingly approved Howard Jarvis’s Proposition 13, which slashed property taxes by 30 percent and capped future increases. This time, however, California is moving the other way.”
Davis’s proposed tax increases over the next 18 months, which he says are needed to help fill the state’s gaping budget hole, will “erase roughly one-half of the benefits from the (proposed) Bush tax cut for residents of California,” according to Wesbury.
Because California taxpayers will benefit less from the Bush tax cut proposal than will other taxpayers in the country, the state’s economy will lag behind the national economy. Fewer dollars of investment will flow into California, entrepreneurs will leave for other states, job growth will slow, and real estate prices will falter. “Cities like Austin, Boston, and other high-tech havens will benefit–provided that Massachusetts and Texas avoid tax hikes,” noted Wesbury.
Although Democrats head into the new year with commanding majorities in the state Assembly and Senate, they will need to woo at least a few Republicans to their side to win the two-thirds votes needed to approve state spending plans.
As of now, GOP leaders are adamantly refusing to discuss new taxes as part of the solution, instead blaming Davis and the Democrats for spending more than they should have during California’s dot-com boom years. State leaders have, however, agreed most new initiatives that would cost the state more money are likely to be shelved. “Virtually any spending programs are going to be dead on arrival,” said State Sen. Jackie Speier (D-San Mateo). “It’s going to be hard to justify them.”
John W. Skorburg is an economist with the American Farm Bureau Federation and member of the Board of Directors of The Heartland Institute.
Above article is quoted from The Heartland Institute, Intellectual Ammunition Spring 2003 http://www.heartland.org
”Roots (Food for Thought)”
– Truly Caring for This Nation’s Most Needy?
By Star Parker
As a rebellious teenager, I broke into houses, torched my teachers’ cars, abused drugs and sex, all just for kicks. Abortion was my birth control and welfare was supposed to be my savior. After all, welfare was created to save people like me, right? By age 22, I had my first child and was well familiar with the system and how to use it to my own advantage. I even “rented” my medical card to friends to earn extra cash. I lived in the secular, socialist cesspool funded by the taxpayers. I was trapped, with millions of others, in a world of dependency on that monthly government check. And as long as the government was there to sustain me, there was little reason to change what I was doing.
That’s why I rejoiced when the system finally was changed in 1996. There was no legitimate argument for maintaining the government-controlled welfare state. Instead of improving people’s lifestyles, it eroded them. Instead of providing a temporary “safety net” to people in times of crisis, it provided a “hammock” and invited people to relax and depend upon Uncle Sam’s services.
Liberals continue, however, to spread guilt and fear in order to reverse course and return to spending on programs that didn’t, don’t and won’t work. Government-run welfare is inefficient, ineffective and littered with waste, fraud and abuse temptations and pitfalls.
But there are far worse consequences to the old welfare system than defrauding the taxpayers. Government-centered programs created a tool by which the state could control the poor. Government housing and inner city communities degenerated into environments of widespread violence and crime. The only schools the poor could afford were state controlled public schools offering permissive social climates, substandard academic curriculum and the indoctrination of children to accept immoral lifestyle choices. Marriage was discouraged and the traditional family unit became scarce. Illegitimacy and abortion rates skyrocketed. It is immoral to even think of subjecting any citizen to its failures again.
Many taxpayers really believed they were doing a charitable deed by subsidizing people they deemed “less fortunate. “They thought they were fighting poverty by passing laws to raise wages, lower rents and finance mothers without husbands and children without fathers. Very few knew of situations like mine, in which getting a welfare check fostered drug addiction and fraud.
Little thought was given to the unintended consequences that seem to be inherent in most all government programs. The welfare state, like an addiction, had a gripping effect upon people. Automatically, you lowered your standards and started living irresponsibly.
Taking care of this nation’s most needy is still a source of heated political debate — not because one side desires to help and the other does not, but because of the basic political philosophy — capitalism or socialism — which should be used to solve the problems of the poor. Either we depend upon charities, churches, the free market and American goodwill, or we revert to failed, destablizing, centralized funding schemes.
We have tried both approaches in modern times. Only one has worked. The debate is over. What is needed is a full-scale devotion to eliminating government-controlled welfare altogether by using faith-based and market based solutions.
A secular government-controlled program is not the solution. It didn’t work for me and didn’t work for millions of others for decades.
Star Parker is President of the Coalition for Urban Renewal and Education in Los Angeles, California. This article is adapted from Eliminating Government Welfare in the Next Millenium which is available in its entirety at http://www.urbancure.org/welfare/eliminating_welfare.htm.
Above article is quoted from Heritage Foundation The Insider April 2003 http://www.heritage.org
”Evergreen (Today’s Quotes)”
– “[Right This Wrong] Forty-two million Americans have no health insurance coverage. Those who do have little freedom and few choices about the health care they receive. The resulting frustrations are boiling over on Capitol Hill. But the so-called Patients’ Bill of Rights is not the answer. The real solution is not to expand the size, scope and cost of government but to expand individual freedom to choose alternatives. Why doesn’t someone in Congress propose a ‘Patients’ Declaration of Independence?’ Congress [should] give every American more freedom to choose doctors they trust, specialists they need and prescription drugs they can afford. True security comes from having true freedom-not simply the freedom to sue a health care provider but the freedom to choose a different, better, more responsive health care provider to begin with.” — Art Linkletter, United Seniors Association
– “It is incumbent upon all of us to rise as far as we can in our own intellectual and spiritual statures so that others, on whom we depend, may find something in turn to draw from us.” — Leonard E. Read
– “If the bureaucracy is not checked it will build, in the name of peace, a defense against every conceivable contingency — so much ‘security’ that ‘the secured’ are without resources — helpless and hopeless.” — Leonard E. Read
”’Edited by Richard O. Rowland, president of Grassroot Institute of Hawaii, 1314 S. King Street, Suite 1163, Honolulu, HI 96814. Phone/fax is 808-591-9193, cell phone is 808-864-1776. Send him an email at:”’ mailto:email@example.com ”’See the Web site at:”’ http://www.grassrootinstitute.org/