Dire states
December 2, 2008
boston.com
LIKE WALL STREET bankers and Detroit autoworkers, the nation's governors are turning to Washington in desperate economic times. And while the line of supplicants seeking bailouts is long, the governors have good reasons to seek help.
The National Governors Association plans to press its case to President-elect Barack Obama at a meeting today in Philadelphia. Governor Patrick, who has already proposed $1.4 billion in budget fixes and may need to offer more, is expected to take part. The governors are seeking a piece of the stimulus package Obama will be proposing.
Across the country, states face staggering budget deficits, as sales-, income-, and property-tax revenues plunge. Yet most state constitutions require balanced budgets. As a result, governors have little choice when it comes to balancing the books.
"Without federal help," says Pennsylvania Governor Edward G. Rendell, the chairman of the association, "we will have to make continual cuts or raise taxes." Either solution - higher taxes or reduced services - stands to hurt average citizens.
The cycle is vicious: As tax revenue falls state by state, programs falter too. Hiring freezes and delayed capital projects lead to unemployment. Unemployment leads to a greater reliance on Medicaid, food stamps, and other safety-net programs. Indeed, cuts in government programs often hurt the most vulnerable, exacerbating the effects of economic recessions.
To ease the pain, Rendell and leaders of the National Conference of State Legislators are calling on Congress and the incoming Obama administration to work with them to stabilize the nation's economy.
Specifically, they are asking that any economic recovery strategy include a temporary hike in the share Washington pays for Medicaid, a joint federal-state program for low-income families. In addition, the governors are asking for increased investments in infrastructure and increased support for unemployment benefits and the food stamp program.
With support from state legislators, governors are already making tough cuts. Twenty states have already cut a total of $7.6 billion from their fiscal year 2009 budgets, according to the National Governors Association. More states anticipate billions more in deficits for the next fiscal year, requiring further spending reductions.
But, at a certain point, it's counterproductive to keep cutting. According to Rendell, about $136 billion in infrastructure projects are ready to go. Federal money would lead to millions of new jobs at a time when private employment is declining.
And without federal help, the crisis will only deepen. |
