States Can't Keep Ducking Tough Choices


July 28, 1991|By BARRY RASCOVAR

Some of the nation's best numbers-crunchers were in Baltimore last week, bemoaning the budget crises precipitated by the current recession and contemplating more bad news in the future.

For the nearly 90 members of the National Association of State Budget Officers, representing 38 states, their annual conference was a time to commiserate with one another over tumbling state revenues and continuing bleak economic forecasts. Public resistance remains widespread to the notion that services have zTC to be cut drastically or taxes raised dramatically to meet the balanced-budget requirements of most states.

Sadly, the nation's governors and their numbers crunchers aren't getting much cooperation from state legislators. Too many lawmakers still are shouting "no new taxes" as though that verbal command will work miracles. Yet few lawmakers are willing to involve themselves in a concomitant step -- wholesale reductions in government programs. Legislators don't dare get involved for fear of alienating voters.

It is a classic Catch-22 situation in which governors and legislators are damned if they raise taxes and damned if they cut services. Too many people have come to expect a high level of government largess. If anything, the loudest cries are for more government assistance, not less. Thanks to the rise of high-paid lobbyists in the nation's state houses, every coalition of note has positioned itself to press for a slice of the state government pie. States almost never take away funds already earmarked for these potent groups.

Throughout the country, states are grappling with this dilemma, sometimes to no avail. Look at the situation in Connecticut, where nearly a month after the mandated deadline, the governor and legislature still aren't close to agreement on how to close a $1 billion deficit. No one wants to face up to the harsh reality that government has expanded far beyond its means to pay for the services it provides.

Governors are more willing to confront this issue than legislators. For a variety of reasons, lawmakers are reluctant to assert themselves in the budget arena. That's ironic because state legislators have exhibited a new aggressiveness over the past decade in challenging the nation's governors in other areas.

But when it comes to raising taxes or eviscerating programs, lawmakers don't want their fingerprints near the scene of the crime.

Yet they may have no other options in the years ahead. The decade of the 1990s is fast becoming the era of limits. Unlike the 1980s, when booming economic expansion permitted an explosion of new government services at little additional cost to the taxpayer, the '90s looks like a time for shrinking programs, revamping tax structures and re-evaluating the way government goes about its business.

There's no end to the recession in sight. Washington economists can proclaim that the worst is over, but don't believe it. Just look at the news this month: Unisys Corp. says it will lay off 10,000 workers; the Chemical Bank-Manufacturers Hanover merger means another 5,000 layoffs; Citicorp. will fire 8,000 more workers in its continuing shake-up; First Chicago Corp. says 1,000 workers will be let go; Shell Oil is firing 4,650; Digital Equipment, 800 more (on top of 10,000 fired so far); Monsanto, 2,500; Texas Instruments, 3,200; IBM could be letting 50,000 workers go by year's end and du Pont could dismiss 10,000.

Given the weak economy, where are all these laid-off folks going to get jobs? Many could wind up on unemployment or welfare. The drain on state programs will grow -- but so will state governments' loss of tax revenue as these individuals lose their salaries.

Thus, the budget crises of 1991 could be repeated in 1992. Maryland officials already are expecting combined deficits next year of $900 million. That figure could turn out to be optimistic. Having tapped most cash reserves (except for the always-appealing state pension fund) this year, the governor and lawmakers may finally have to choose their poison -- tax hikes or massive firings as programs are shuttered or greatly reduced in size.

This is the time for leaders to think about reshaping state government and redefining its role. Innovation and experimentation seem in order. It is the perfect moment for a creative partnership between the legislative and executive branches. But too many of the key players are still sitting back and hoping that prosperity is just around the corner, that they can avoid the painful decisions if they just continue to do nothing.

That's the kind of rigid mind-set that got us into this mess. In an era of limits, elected officials have to make agonizing choices. The longer they wait, the more pain they will inflict.

Barry Rascovar is deputy editor of the editorial pages of The Sun.

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