Saturday, February 19, 2011

Why it's difficult to solve a state budget crisis

A few years ago I was with my friend, Brian, and his dad, an Alberta legislator and right-hand man to "King Ralph" Klein, Alberta's long-time Conservative premier, an earthy ex-broadcaster who had the good fortune to be running an oil-rich province.

We were watching a hockey game with Ralph who was peppering some young people with questions about government that you won't find in a civics test.  Ralph kept hammering them with the same question that they stumbled to answer -- What's the number one goal of every elected official?

Finally King Ralph bellowed the answer: To get reelected!

Concise, to the point and hardly rocket science but true indeed and that very crusty piece of reality should be in our minds as ponder our state's financial mess.  It didn't happen overnight and solving it isn't as easy as cutting spending, gutting union contracts and the unions that negotiated them or eliminating "waste" in government.  Partisanship also doesn't work as every party is equally to blame.  One day you're the bug, next day you're the windshield.

Let's go back to the early 1970's when Pat Lucey was the governor who touted a "no tax increase" state budget except that there were dozens of fee hikes and cuts in shared revenue to schools and local units of governments.  Maybe the state income tax rate didn't increase but taxpayers shelled out more for license plates, tuition and local property taxes.

Things went well to the point that when Pat quit to become Ambassador to Mexico, Marty Schreiber, his successor, was blessed with a billion dollar surplus which, he argued, should be socked away for a rainy day.

But my dear friend and mentor, Lee Sherman Dreyfus, rode the mantra of giving the surplus back to taxpayers as he swept into the Governor's office in 1978 and legislative Democrats, not to be outdone, blasted Dreyfus' plan to distribute the largess as favoring the affluent.  Lee countered by telling the Democrats to feel free to come up with their own plan, which they did and it gave back more than Dreyfus asked.  The net check to each taxpayer, as I recall, came out to something like $80 which, even in 1979, wasn't a lot.

Things changed and as Lee left office in 1983 the state's finances began to sour and the new governor, Tony Earl, sure wished he had that rainy day fund.  Instead Earl and his Democrats imposed a temporary income tax surcharge.

To their credit, it got the job done without significant pain and was even terminated ahead of schedule.  Instead of being a hero, Tony was hailed by challenger Tommy Thompson as "Tony the taxer" and that manta cost Tony reelection in 1986.

Of course Tommy and his successor, Jim Doyle, each had their special projects and even when the economy went south during Doyle's second term we saw ridiculous special interest spending at the same time employees providing core services were being furloughed and constituent services curtailed.

So, from this inside perspective, here's your reality check.

First, cutting "waste" and "fat" in government sounds great in a political ad but rarely happens in a meaningful way and, even when attempted, usually fails.  Think about it.  If you really cut out the waste and fat, then you wouldn't have any more to cut, right?  That's assuming the best-case scenario.  In reality, trimming government fat may stub special interest toes and that doesn't help reelection chances.

Second, when cuts are made, it's usually core services that are attacked, not the pet projects.

So, if you really want to cut spending, you need to empower the folks who run the show on a day-to-day basis to spend taxpayer money as if it was their own.  It seldom happens.  And special interest spending must take a back seat to funding core services.

The reality is also that even if you've cut as much as you can, it may not be enough.  Prices go up and the state is a consumer like the rest of us.  Without a rainy day fund socked away -- something we encourage people to have -- the state gets into a frenzy to address budget defecits because there was no planning for them.  When my home was flooded I had to dip into savings to make repairs.  Same for medical emergencies not covered by insurance.

Between Lee "giving back the cookie jar" and Tony getting his head chopped off for actually raising taxes, albeit temporarily, you're not likely to see the state do anything meaningful to truly manage its finances.  Doing so would violate King Ralph's rule #1. 

And if you don't believe me, ask Tony the Taxer.

Nobody likes paying taxes and no politician likes raising them. 


Dad29 said...

You made a VERY good case for limited government.

DNR should be reduced to (largely) a technical-advisory group for locals; same with Education. State Patrol should be abolished except for truck-inspections. State building regulation should be technical-services, just like DNR.

Same for DHS.

That was easy. What's for lunch?

RAG said...


The question I'm toying with is that isn't what you propose just cost-shifting as Lucey did? And some of the troopers serve more than one county so there might be multijurisdictional issues which I think could be resolved but in the real world it may take some doing. Might it be more expensive as troopers are sometimes paid less than local counterparts?

We do have state reimbursements for road work, i.e., Wisconsin doesn't have state road crews like, say, Iowa so the state reimburses counties for plowing, maintenance, etc., on state highwaus.

I think the problem is that you'd shift more of this onto the local property tax which is way overburdened in this state.

One thing that could be better facilitated is regional and cross-jurisdictional cooperation. (I don't use the word "consolidation" because of the false assumption that it's always cheaper and more efficient.) I swear to you from nearly four decades in government that if you let the people in the trenches who work for a living run things you'd see a lot more efficiency.

Lunch is at Wendy's.

Dad29 said...

You're right: subsidiarity is the way to go. The lower the level of decisionmaking, the better the decisions (in general terms.)

By the way: Counties and Munis can do with less, too--as soon as the State erases all the regulations they've cooked up over the last 20++ years, most of which are utterly useless.