State budget officers should survey taxpayers
A National Association of State Budget Officers’ fiscal survey of states doesn’t even begin to reveal the magnitude of the crisis despite tax revenues $25 billion higher than pre-recession levels. They should check with taxpayers on how bad things really are.
Where exactly have you been the last few years, state budget officers? Apparently not in America.
You must not have been around while your state and local governments went on a spending binge that now threatens our recovery through crippling tax increases and service cuts.
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Listen to this Week’s “Failing States” Podcast with Frank Keegan
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You must have been otherwise occupied when average taxpaying Americans got hit with an economic tsunami. Now you plan to help drowning citizens and businesses by tossing us the rock of increased taxes.
Thanks for the Spring 2010 Fiscal Survey of States you released Thursday, telling us they face “the most difficult challenges … for financial management since the Great Depression,” leaving states with “$127 billion in unresolved gaps.”
“Spending and revenue is unlikely to return to pre-recession levels until fiscal 2012 or later.”
That’s all untrue. Revenues and spending have returned to “pre-recession” levels if that includes 2006. And you, budget officers, know better than anyone that the true state deficits must be measured in trillions when you include hidden debts such as retirement costs and other bookkeeping tricks.
According to U.S. Census Bureau data, state and local government tax revenues for 2009 were $25 billion more than in 2006, which public officials said at the time was a great year.
And according to U.S. Governmentspending.com, state and local governments still are on track to burn through 33 percent more of other people’s money than they did in 2006.
Sure, the National Association of State Budget Officers claims “general fund spending was down 6.8 percent” this fiscal year, and next year will be $52 billion below the all time high in 2008.
What they don’t mention is how much of expenses they have shifted out of the general fund, deferred for future taxpayers, pushed down to local governments and hidden in long-term debt.
State and local governments altogether have hidden $3-7 trillion in unpaid retirement costs and $2.2 trillion in deferred capital costs plus incalculable trillions more in other accounting tricks and secret – often sucker-bet – debt to fool the public and bond investors.
Budget officers also are a little vague about how states are going to make up for the $787 billion in American Recovery and Reinvestment Act money that runs out Dec. 31, right in the middle of the fiscal year. Or how to pay for Medicaid and national health care. Or what to do about the billions they owe Uncle Sam for unemployment benefits.
The fact is, these state budget officers were on the scene while state officials committed egregious fiscal acts.
Don’t let them tell you this Great Recession caused the rotting fiscal foundations of state and local government; it merely revealed them.
The true causes are irresponsible spending, denial of economic reality and betrayal of public trust.
From 2002 until the recession hit, state and local government taxing and spending increased at double the rate of economic growth and inflation.
Here’s a hard bottom line: The third of Americans who pay for everybody else are tapped out.
According to Bureau of Labor Statistics most recent data, private sector employment started dropping steadily in June of 2008. By September of this year, it had tanked at 2.7 percent, or more than 3 million workers, below the same month in 2001.
Meanwhile federal employment for the same period was up 2.2 percent, state employment up 4.5 percent, and local employment up 6.8 percent.
Worse, average weekly wage for private sector workers dropped 0.6 percent in the third quarter of 2009, the latest data available. At the same time, total government weekly wages went up 2.4 percent, including 7.1 percent for federal employees, 1.3 percent for state workers and 1 percent for local employees.
The 10-year trend is even worse for the workers who have to pay for everybody else. From 2001 to 2009 private workers made 24.7 percent more, but government workers increased their pay 31.2 percent.
And those numbers don’t even include defined benefit pension plans, health insurance, retirement health-care promises, paid vacation and sick leave, and other benefits that are ancient history in the private sector.
Don’t ask average Americans who have suffered devastating losses to sacrifice more or there will be even fewer with anything left to tax. Revenues are down because the people who pay taxes are down, many down for the count.
NASBO’s next fiscal survey should include at least a nod toward those who pay the bills. Fiscal survey us to find out what’s going on in America.
Frank Keegan is national editor for the Franklin Center on Government and Public Integrity and watchdog.org
