NCPA - National Center for Policy Analysis


February 27, 2008

Several states are facing some tough fiscal times, says Byron Schlomach, director of the Center for Economic Prosperity at the Goldwater Institute.

For example:

  • California's overspending problem amounts to more than $14 billion for the 2009 fiscal year.
  • New Jersey's spending versus revenue gap could be $3.5 billion.
  • Virginia and Massachusetts each face $1.2 billion gaps.
  • Arizona's gap for 2009 is estimated at $1.7 billion.

Compared to California's fiscal problem, Arizona's looks like chump change.  But here's "the rest of the story," says Schlomach:

  • As a percentage of general revenue spending, Arizona's 2009 spending/revenue gap is 16 percent, the biggest of all the states.
  • California's gap is 14 percent of its budget.
  • New Jersey's is 11 percent.
  • Arizona's spending/revenue gap for 2009 is 16 percent of the state's general fund spending.

Despite being a cool billion short on the current year's budget, Arizona's governor, Janet Napolitano (D), and some members of the legislature have proposed budget "cuts" that amount to leaving unspent funds unspent and vacant jobs vacant.  Meanwhile, the governor's budget office is predicting future revenue growth almost equal to that of past boom times, even as experts say the state's economic recovery will be slow.

Indiana's governor, Mitch Daniels (R), recently called on state agencies to cut spending by 5 percent in response to a $231 million spending/revenue gap.  Wisconsin's governor, Jim Doyle (D), ordered agencies to cut spending by $111 million.

Arizona is facing a billion dollar hole after double-digit percentage budget growth in four of the last five years and some of the state's policymakers can't bring themselves to cut spending by more than one-half of one percent ($100 million over two years).  Delaying the inevitable will only make it that much more painful, says Schlomach.

Source: Byron Schlomach, "Denial and Delay," Goldwater Institute, February 25, 2008.


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