Steve Chapman has a great piece in Reason about the fiscal crunch in state finances. While we regularly hear the stories about California and New York, more than two-thirds of the states have emergencies ranging – in Chapman’s words – from the painful to the excruciating. And while state politicians bewail the current state of affairs, they did it to themselves – and to us.
The crisis in state budgets is not an accident, and it wasn’t unforeseeable. For years, most states have spent like there’s no tomorrow, and now tomorrow is here. They bring to mind the lament of Mickey Mantle, who said, “If I knew I was going to live this long, I’d have taken better care of myself.”
If they had known the revenue flood wasn’t a permanent fact of life, governors and legislators might have prepared for drought. Instead, like overstretched homeowners, they took on obligations they could meet only in the best-case scenario—which is not what has come to pass.
Over the last decade, state budgets have expanded rapidly. We have had good times and bad times, including a recession in 2001, but according to the National Association of State Budget Officers, this will be the first year since 1983 that total state outlays have not increased.
The days of wine and roses have been affordable due to a cascade of tax revenue. In state after state, the government’s take has ballooned. Overall, the average person’s state tax burden has risen by 42 percent since 1999—nearly 50 percent beyond what the state would have needed just to keep spending constant, with allowances for inflation.
Even low-tax states like Texas and Nevada have followed the same course. No one has been inclined to say, “Taxpayers don’t need to send us more money. We’ve got plenty.”
All that growth should have been enough to pay for essential programs and furnish ample reserves, allowing state governments to weather a downturn without major adjustments. But the states put a priority on burning through all the cash they could get. Last year, they spent about 77 percent more than they did 10 years before.
Read it all. As state campaign chair of Maine’s 2009 Taxpayer Bill of Rights referendum, I’m not surprised by Chapman’s story. Between 1996 and 2007, Maine nearly doubled its state budget with the tax burden going up in lockstep. Even though absolute revenues to the state increased year by year during that time, our Legislature has managed to create a deficit every year as well.
The electorate has begun pushing back on both the taxing and the spending. Last year, the Legislature rammed through a special tax on beer, wine and soda – in the middle of the night and without debate – and then found itself on the receiving end of a successful referendum repeal effort (called in Maine a “Peoples Veto”). This year, the Legislature used federal stimulus money – meant for infrastructure and job creation – to close a current accounts deficit.
And these geniuses wonder why people are angry.
