A fingers-crossed budgeting mess
When the state Legislature adjourned at the Capitol a month ago, members were hopeful that a series of one-year budget fixes and a potentially improving economy would be enough to keep the budget on track.
But that technique — budgeting with your fingers crossed — proved to be a disaster this week. The news now is that the state will have a $249 million shortfall in the current budget year that ends June 30. As a result, the state will have to borrow from next year’s budget, creating a $384 million shortfall in the upcoming budget before that budget year even begins.
What’s worse, because of the one-time budget fixes used to attempt to balance this year’s budget — or in the case of federal stimulus funds, a three-year fix — the projected budget shortfalls get even worse beginning in 2011.
A large part of the problem is that the Legislature declined to engage in real budget cutting, hoping that the economy would rebound and that raiding reserve funds and other short-term fixes would get the state through. Legislators would have added another giant, one-time headache to the mix — raiding the state’s worker’s compensation insurance fund of its surplus — if a vociferous public outcry hadn’t stopped them.
Lawmakers also raised taxes — or fees, if you will, though the money still comes out of taxpayers’ pockets — in a couple of key areas. They ended a payment that retailers received for collecting state sales taxes. They eliminated the senior property tax exemption for next year, and expect it will be gone for several more years. And they raised the vehicle registration taxes beginning this month. All this when taxpayers are also struggling with the worsening economy.
Although the budget issue isn’t strictly partisan, it is worth noting that Republicans in the state Senate offered plans to reduce more than $250 million from state spending by making cuts in nearly every department and eliminating a number of new programs that had been created just in the past few years. Democrats rejected the proposal, but that $250 million figure looks pretty important now, given the $249 million shortfall in the current budget.
The larger issue is that the Legislature avoided making tough budget decisions this year, hoping that the one-time fixes and the economy would make those decisions unnecessary.
Now, either in a special session this summer or come next January, lawmakers will have to look at ways to significantly cut state spending. It would be a great deal easier if they hadn’t punted on that process during the legislative session this spring.