By Brendan Farrington
Texas Insider Report: AUSTIN Texas California Texas New York Florida and Illinois represent about 1/3rd of all state spending nationwide according to the National Association of State Budget Officers. Each is taking its own approach to dealing with the common problem of having less money to pay for programs already in place. The five states are the nations most populous and each is taking a very different approach to solving their respective budget deficits.
- Low-tax Texas is considering tapping its rainy day account to soften the effects of spending cuts.
- New Yorks governor pushed budget cuts while keeping a campaign pledge to avoid tax increases.
- Californias governor wants to maintain temporary tax increases to keep $9 billion a year flowing to the state.
- And residents of Illinois & Florida are getting very different takes on taxes: Illinois passed a massive increase
- Florida proposes giving its taxpayers a big break.
If those states are a guide there is no single model for how to close a deficit. They do illustrate that the priorities of the majority party play as much a role in budgeting decisions as a states fiscal health.
Its too early to tell which approach will prove most successful.
In Florida Republican Gov. Rick Scotts proposal to cut government spending to address the budget shortfall and then cut more to give corporations and property owners a tax break is an experiment that no other large state is trying. The idea is that short term pain for those who rely on state services can become a stimulus that will lead to long-term financial health.
In all hes proposing $1.7 billion in tax cuts. Theres more than one way to skin a cat and theres certainly more than one way to reduce a budget deficit said Sean Snaith director of the University of Central Floridas Institute for Economic Competitiveness.
Floridas budget gap is about $3.7 billion about 5 percent of its current $70. 5 billion budget. Scott wants to make cuts to fill the hole and then begin gradually phasing out the states corporate income tax which at 5.5 percent brings in about $2 billion in revenue for Florida.
He also wants to cut property taxes and a variety of fees and lesser taxes. Hes sought advice from Donna Arduin who has previously helped prepare budgets for Republican governors in New York California and Michigan as well as former Florida Gov. Jeb Bush.
Arduin said she believes there is a correlation between the size of state government and the strength of the private-sector economy.
The best way to improve your budget is to improve your economy said Arduin president of Arduin Laffer & Moore Econometrics. When government is big the economy does not do well. When government is smaller the economy does do well.
Illinois Gov. Pat Quinn is taking the opposite approach. His state is facing a $15 billion deficit yet his $35.4 billion budget proposal calls for an overall $1.7 billion increase in spending.
Quinn pushed through an income tax increase and Democrats want to borrow $8.7 billion to pay off bills that have piled up. Republicans have proposed cutting up to $6.7 billion in spending an idea Quinn rejects.
We are not going to jeopardize our economic recovery for their proposal. We have a dynamic economy in Illinois thats cut unemployment for 12 straight months -- frankly no thanks to them -- and I believe that investing in education health care human services public safety thats part of an economy that recovers said Quinn a Democrat.
He uses the same argument for increasing government spending that Scott and other Republican governors use for cutting it: Its the best way to jumpstart the state economy and generate the additional tax revenue that will lead to healthy budgets in the future.
In New York the approach of Democratic Gov. Andrew Cuomo is more in line with that of his Republican peers around the country.
The Legislature recently passed a budget on time -- a rarity in a state infamous for political dysfunction -- that largely adhered to Cuomos vision. The budget cut spending to address a $10 billion deficit including historic reductions to schools public colleges social service programs and health care and did not raise taxes.
Democratic lawmakers had wanted to extend a temporary tax increase on New Yorkers earning more than $200000 a year.
This is about recognizing the new economic reality that government is responsible for management just like everyone else Cuomo said. The days where government can just throw money at the problem and raise more taxes ... those days are over.
Texas lawmakers also refuse to consider tax increases as the state faces its first budget deficit in many years.
Lawmakers and Gov. Rick Perry are debating how to address a $27 billion shortfall in the two-year budget that will run from Sept. 1 to Aug. 31 2013. Thats about 30 percent of the $88 billion in state money that makes up the current two-year plan.
One house of the Texas Legislature recently approved budget bills that tap $3.2 billion from the states Rainy Day Fund while cutting $8 billion from public schools and slashing Medicaid by more than $4 billion. Funding for highways prisons state parks and dozens of other programs also was cut or eliminated entirely.
The Texas Senate wants to restore some of those cuts primarily to K-12 schools but the funding source is uncertain. One possibility is using more of the states $9.4 billion rainy day fund although how much to use and when to use it has yet to be resolved.
Families sent a pretty clear message with their November votes. They want government to be even leaner and more efficient and they want us to balance the budget without raising taxes on families and employers Perry said. Balancing our budget without raising taxes will certainly set a nice example for the rest of the nation.
Republican lawmakers from California -- the minority in that state -- certainly think so.
A group of them are traveling to Texas on a fact-finding mission to see how that state lures businesses including some from California. They argue that the best way to restore California to fiscal health is by cutting corporate taxes -- which they succeeded in doing two years ago -- and streamlining business regulations.
California Gov. Jerry Brown wants to ask voters to renew temporary increases in the sales income and vehicle taxes but he needs two-thirds of the Legislature to support putting the question on the ballot. Republicans are resisting. Most have signed no-tax pledges making compromise with majority Democrats difficult.
Brown and the Democrats already have addressed more than $11 billion of Californias $26.6 billion deficit mostly through spending cuts but are warning that an all-cuts budget will do irreversible damage to core government functions including the K-12 and higher education systems.
The Democratic governor has taken his appeal directly to voters via YouTube emphasizing the effects of more spending cuts schools fire and police services health care and more.
I dont want to do that and I dont think it should be done to you without your voice Brown says in the video.
Christopher Wills in Springfield Ill; Michael Gormley in Albany N.Y.; Judy Lin in Sacramento Calif.; and Chris Tomlinson in Austin Texas contributed to this report.
