Marta Mossburg: States aren't broke, they're on tax-and-spend binges
By: Marta Mossburg
Examiner Columnist
October 9, 2009
Figures from the U.S. Census Bureau on state tax revenue should force everyone to gasp - but not for the reasons most people think.
They are not that bad. Let me say that again. They are not that bad, despite Armageddon-like pronouncements from governors and state budget chiefs around the country.
"Revenues have come in below even the most pessimistic forecasts," said National Association of State Budget Officers Executive Director Scott D. Pattison in a statement in June. "Plunging revenues have caused the unraveling of state budget plans, continuing to force states to make painful decisions."
Because of statements like this most people could be forgiven for thinking that states are going bankrupt across the nation, schools shuttered and roads left unpaved. Combined with the rising unemployment figures and tanking stock market earlier this year it almost seemed as if the next Great Depression had arrived.
Granted, things are not good. Banks keep failing across the country and employers keep shedding jobs. Payrolls fell by 263,000 in September and the U.S. has lost 7.2 million jobs since the recession started in December 2007.
But the Census figures show that states collected $865 million more tax revenue in the 12 months ending in the second quarter than they did for the same period in 2006.
An analysis of the Census data by Frank Keegan of the Franklin Center for Government and Public Integrity shows that over the past six years, "while total state taxation increased 46 percent, Gross Domestic Product went up less than 23 percent and inflation less than 17 percent. The total number of households in the U.S. increased only 4.6 percent."
In addition, he found that "State taxing grew double GDP, almost three times inflation and ten times household growth, while Americans' incomes actually declined."
So, the real issue is not that states are going to collapse. It's that they got used to uninterrupted growth funding ever bigger government and their elected officials do not know how to downsize.
Real leaders would point out the fact that revenue is down, but by adopting the 2005 or 2006 budget, state finances could be put back in order. I don't remember great protests during those years over awful state services. At the time, states considered themselves flush with cash generated by taxes from home sales and rising property values.
Instead, almost all state governors groveled for federal government help this year.Gov. Mark Sanford of South Carolina, a Republican who resisted federal money, could not resist the charms of a woman in Argentina, making a fool of himself and negating his principled stand against stimulus dollars through the affair.
Maryland Gov. Martin O'Malley made the state budget outlook seem so dire it would need a savior to remedy it in his State of the State speech in January. "It is my hope, and it is my belief, and it is my expectation that the balanced budget we were required by law to submit to you this month, will be a better budget by the time it's up for final consideration in April. Why? Two reasons. Barack,... Obama."
Is reverting to a budget from three or four years ago really a tale of Shakespearean proportions?
The fact that Americans do not immediately reject such false depictions of calamity shows everyone has gotten too soft, too willing to ask for a handout than deal with the consequences of bad choices.
It's not surprising. In recent decades U.S. society has praised self-esteem more than achievement and following rules, raising generations of adults who prioritize themselves above all else as Jean M. Twenge and W. Keith Campbell argue in "The Narcissism Epidemic: Living in the Age of Entitlement."
So it's no surprise that the leaders Americans have chosen reflect that culture. What's pathetic is that they still espouse the delusional idea that government should grow at all costs, even when Americans' income falls.
Lower tax revenue is no fun. But elected officials should not act as if the world is collapsing when resolving a deficit requires adopting a budget from only a few years back.
Examiner columnist Marta Mossburg is a senior fellow with the Maryland Public Policy Institute and lives in Baltimore
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