Is Your State In Fincial Trouble? Who's To Blame?

Over the past few weeks we have seen a rash of stories about the many States that are experiencing, or are anticipating, a budget shortfall. The reality is that the reports of budget shortfalls have become an annual Spring tradition for many States, like the blooming of the Cherry Blossoms. But what is interesting is that many in the media and the government are stating that this is a sign of a recession. No its not. There are two reasons that the States find themselves in this mess:

• Our elected officials are spending too much money.

• Tax revenue are far less than was expected.

In my home State of New Hampshire we are looking at a possible deficit of $300 million dollars. The classic response has been “it’s George Bush's fault.” Why not, it has become so easy to blame President Bush for anything and everything, just ask Keith Olbermann. Personal and professional accountability has been lost on many State legislators, Governors, and other government officials responsibly for creating sound budgets, but instead have driven their States into the ground with their lack of fiscal conservatism.

How did all the States find themselves in this mess? I wish the easy answer was the downturn in the economy, but the truth is that our representatives have been acting recklessly with OUR money for sometime; it is only now starting to catch up with them. States gather together every year to draw up a budget. Part of that budget process includes a list of everything they want to spend money on (which often looks like the Christmas list of a 5-year old child) , and the other part is a listing all of the “expected” revenue. Excepted is a funny word. To some it means actual revenue, to others it merely means potential revenue. But what expected truly means is a best guess. Well for many that guess was off, not by a little, but by a lot.

So how do WE get out of this mess, because you see, the politicians will be looking to their next victims (oh, I am sorry…continuant's) to “help solve this crisis?” We will hear how we all have to “tighten our belts,” “sacrifice on a few things,” or “go through the pain now” to correct the problem.

Like foxes in the henhouse, our representatives have already made a few “suggestions:”

Maryland – Tax the Rich (Replace Tech Tax with Capital Gains Tax)

New Hampshire – Increase the burden on the lower income and tourist (Increase in Cigarette Tax and reduce Wine Discount on Volume Sales)

North Carolina – There it is again, the “sin tax” (Increase Tax on Cigarettes)

New York City – Say it with me, “sin tax” ($1.50 per pack tax INCREASE)

Minnesota – Some tax increases, but major cuts ($373 millions dollars, manageable. 1 billion dollar, bend over tax payers!)

New Jersey – 3 billion in the hole. Raise toll charges, and oh, spend $580 million more on schools ("That will be $100.00 to cross the bridge over to NYC)

California - $14 billion dollar deficit, no big deal! (Maybe Hollywood Can Throw a Fundraiser!)

Massachusetts - 2.5% tax on college endowments (No...we meant tax the evil oil companies, not us!). This of course follows the failed attempt by Davel Patrick to get casino gambling.

In all, 31 States are facing revenue shortfalls (CBPP: States facing Tough Budget Times). Trust me when I say that there is enough blame to go around. Republican, Democrat, and Independent. Blame goes to the Republicans for abandoning their conservative fiscal principals. To the Democrats for living up to the motto of “Adeo Ut Illic Es Miseratio , Nos Vadum Epulum.” And to the Independents for being non-committal on everything. So my fellow taxpayers, hold onto you wallets, because the taxman cometh!

Most budget crisis’s could have been prevented, but now some tough choices will have to be made. All of the concerned States will implement a combination of budget cuts and tax/fee increases. But how can the effected States prevent this from happening in the future? The solution is simple, but not easy:

1. Set a realistic budget. You cannot be everything to everyone. The goal of any State is to preserve the infrastructure (roads and bridges), provide an adequate education, insure strong law enforcement, and maintain a disciplined social services.

2. Set realistic revenue goals. Granted you cannot foresee every bump on the “economic highway,” but in the same regard, we should not be spending every last penny. Experts believe that you have to underestimate your potential revenue, by as much as 25%.

3. Document and audit every penny spent. Enact “Budget Transparency” policies and laws. This would require each department to post how they are using OUR money to support OUR needs.

4. Establish a strict “Rainy Day Fund (RDF).” This fund should have stringent guidelines as to how the fund can be used. Rainy Day Fund can be subsidized by (but not limited to):

• Any cost savings recognized at the end of the year is not spent, but placed in the Rainy Day Fund. That would mean strictly monitoring each State Office and holding them to task.

• Any revenue collected above the estimated projected revenue would be placed into this fund.

But what can “We the People” do to ensure that our elected officials are managing our money correctly?:

1. For beginners, be smarter about who we elect. Think less about Democrat, Republican, and Independent, and think more about the agenda of the candidates. Every candidate wants our children to have a good education, but how to achieve that differs from candidate to candidate.


2. Hold each of your representatives to task, even if you didn’t vote for them. Each representative should tell you exactly where they stand on matters related to the budget and taxes. Screw the rhetoric and insist on facts!


3. Voice your concerns. If you do not express your disappointment, then your representatives will feel that they have free rein to do whatever they want with YOUR money. Write editorials, call and write your representatives, get your neighbors and friends involved. Remember, your representative doesn’t have to agree with you, but if enough people speak up, they will listen.

It is important to remember that States do more harm to their citizens when they support a fiscal environment that is mismanaged and strained. It is not just a matter of spending wisely, but taxing wisely as well. In the end fiscal accountability, contrary to what our representatives would have us believe, is the duty of the people, not the politicians.