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January 26, 2011

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State Budget Bunk
by Steven Malanga - City Journal

A taxonomy of fiscal gimmicks, evasions, and ploys

In a 2009 segment on Comedy Central’s The Daily Show, host Jon Stewart told viewers that many recession-hammered states had turned to unusual methods to raise money. “Are any of these ideas actually stupid?” Stewart wondered. Cut to Daily Show correspondent Jason Jones, who described Arizona’s plans to sell its state government buildings for $735 million, lease them back, and keep on using them. Quickly discerning the problem with such a maneuver, Jones confronted Arizona state senator Linda Lopez: “So you’ve got $735 million for this year. What happens next year, when you don’t have that and you’ve got to pay rent?” Lopez’s awkward response: “That’s always the problem, but we gotta get through this year.”

Arizona is hardly alone in straining budget credibility to the breaking point. Facing scary revenue drops that left their budgets dangerously unbalanced after years of runaway spending, states have employed an unprecedented number of fiscal gimmicks over the last two years to try to make up the difference. They have swiped revenues dedicated to maintaining roads or enhancing emergency medical systems; sold future lottery proceeds for cash today; grabbed unclaimed money in personal bank accounts; and redefined taxes as fees to get around constitutional limits on tax hikes. And they’ve justified these moves by claiming that voters are in no mood for the spending cuts or explicit tax hikes necessary to shrink deficits legitimately—even though the tricks often circumvent budget restrictions that the voters themselves enacted.

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4 comments:

sig94 said...

The State of New Yawk did that back in 1991 when they sold Attica Prison to the NY Urban Development Corporation and then leased it back. Independent state authorities such as the UDC and the Dormitory Authority are "off budget" and can sell bonds to raise cash without the approval of the taxpayers - but these bonds are to be paid back with public funds. Of course it was Gov. Mario Cuomo who did this. His idiot son is now our new governor. Get ready for more of the same magic tricks.

Nickie Goomba said...

Imagine my anxiety at having Jerry Brown, a Democrat legislature, the 9th Circuit Court, and public sector unions in charge of solving the problem. My butt already hurts.

Anonymous said...

You are screwed.

Anonymous said...

both of you.