Governors Chop Spending - Politicians in Both Parties Aim to Balance State Budgets Through Cuts, Not Taxes

From The Wall Street Journal:

Governors around the U.S. are proposing to balance their states' budgets with a long list of cuts and almost no new taxes, reflecting a goal by politicians from both parties to erase deficits chiefly by shrinking government.

On Monday, Florida Gov. Rick Scott, a newly elected Republican, is expected to issue a budget that cuts state spending by $5 billion and overhauls public-employee pensions.

Reining in spending and taxes was a central theme in the November election, helping 18 Republicans win governorships, but many Democratic governors have also pledged to avoid new taxes. A theme of cuts and consolidation has emerged in budgets released so far by governors of both parties, such as those in California and New York (Democrats) as well as Arizona and South Dakota (Republicans).

Budget proposals in most states are expected by the end of this month, to be followed by months of tussling in state legislatures. Most state fiscal years begin July 1.

While states early in the economic downturn saved money through employee furloughs or by freezing funding levels, budgets for the coming fiscal years are aiming to combine programs or, in some cases, eliminate entire state agencies. Some state officials and lawmakers say they have a chance to reshape government in ways that might not have been politically palatable in years past.

"The way we responded to recessions in the past was to do less of the same, with the hope of having more money later so we could do more of the same," Gov. Kitzhaber in Oregon said. "There's a once-in-a-generation opportunity to do some things we should have done a long time ago but couldn't make the politics work."

State tax receipts, which shrank during the recession, are growing again, yet states will mostly be without federal aid they had for the past two fiscal years. The 2009 federal stimulus bill provided $150 billion in assistance to the states over two years.

Education spending is emerging as a target.

In California, which faces a $25.4 billion deficit, newly elected Democratic Gov. Jerry Brown has called for big cuts in Medicaid and higher education. He also wants to shift more responsibility for corrections and foster care to local governments.

To pay for that shift, and to avoid even deeper cuts, Mr. Brown has called for a June election to ask voters to extend temporary increases in the state income and sales taxes, as well as vehicle-license fees.