NCPA - National Center for Policy Analysis

Profligate States Want a Federal Bailout

February 21, 2003

The National Governors Association has drafted a resolution pleading for federal funds to help them balance their budgets. It asserts that "the most powerful immediate economic stimulus for the nation's economy is to provide financial assistance to the states."

But the states suffering the most are the very ones that spent beyond their means during the last decade. A comparison of their spending growth from 1990 to 2002 against their projected budget deficits illustrates the case:

  • Spending in California over the period has left that state with a projected deficit of $34.8 billion.
  • Ohio, which increased spending 70 percent, faces a $4 billion shortfall.
  • Spending in New York rose 24 percent, leaving it with a $12.5 billion headache.
  • After increasing spending 61 percent over the 1990s, Illinois faces a $2.3 billion shortfall.

A recent Cato Institute analysis noted that if the states had simply limited spending increases to inflation plus population growth, they would now be enjoying a surplus of $100 billion -- instead of staring at a combined deficit of $68.5 billion for the coming year.

Source: Editorial, "The Tax Men Cometh," Wall Street Journal, February 21, 2003.

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http://online.wsj.com/article/0,,SB1045792636972984583,00.html

 

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