Some 30 states have massive budget deficits, but let's examine two that are consequential to Arizonans: ours and California's. How policymakers navigate deficits that equal roughly a quarter of their budgets will influence the trajectories of their economic recoveries. The early results don't portend positive trajectories.
After California voters defeated a massive tax increase designed to maintain high levels of government spending, lawmakers--some of them anyway--took the tax hike defeat as a message that spending cuts were voters' preferred method to balance the budget. In July, the California Assembly passed $16 billion worth of cuts (never mind that the deficit stood at $24 billion). Predictable wailing ensued. Wailing apparently works.
California agency heads are backfilling budget cuts with funds from other programs, or--not surprisingly--finding ways to preserve the program even with the cuts.
Arizona's budget--although smaller--has the same relative size deficit as California's. State lawmakers crafted a 2010 budget that spends roughly $9.8 billion based on revenues of $7 billion. Upset at the fact that lawmakers refused to raise sales taxes, Governor Jan Brewer added $435 million in state spending. In other words, our $2 billion fiscal year 2009 deficit has now been transformed into an ongoing $3 to $4 billion budget fiasco.
As gubernatorial elections in each state begin to take shape, would-be candidates should take note that a recent Rasmussen poll of likely Arizona voters found that 76 percent say the unwillingness of politicians to control government spending is a bigger problem in the state than the unwillingness of voters to pay enough in taxes. Just 17 percent say reluctant taxpayers are the bigger problem.
With no money and a sagging economy, it's time (still) to cut the budget.
Steve Voeller is president of the Arizona Free Enterprise Club, a non-profit organization whose mission is to advance policies that promote a strong and vibrant Arizona economy.
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