The Burdens that Drag State Finances Down


August 05, 1991|By NEAL R. PEIRCE

WASHINGTON — Talk about blaming the victim. As state governments endure the tortures of Hades, with drastic budget cuts coast to coast, critics leap forward to say the states are irresponsible spendthrifts, totally at fault for all their miseries.

''A decade of runaway state government expenditures,'' and pandering to ''special interests'' -- suggests Stephen Moore of the Washington-based Cato Institute -- is what has led the states, from Augusta to Sacramento, to this summer's marathon budget-bargaining and threats of payless paydays.

Forget the recession, forget slashed federal aid as an excuse for state budget crunches, says Mr. Moore. The real reason for the fiscal agony is that states let their budgets balloon by 104 percent, almost twice the rate of inflation, over the course of the '80s.

The Wall Street Journal joined the sharp criticism of the states with a July 1 headline, ''Growth Industry: Fiscal Crisis or No, State Bureaucracies Just Keep Swelling.'' Some television commentators picked up the theme, suggesting few fiscal crises would exist if state payrolls hadn't risen so fast in the '80s.

So what is the truth? Do the states deserve these brickbats? Is there a convincing case of state profligacy?

Well, state payrolls and budgets have grown dramatically. Some governors and legislators have turned in sterling performances; others have been huge disappointments. And you can always find pockets of excessive spending -- pork-barrel politics lives.

But anyone who thinks the last decade has been a season of knee-jerk liberalism, of state spending for spending's sake, must have spent the '80s on an errant manned mission to the moon.

The 1980s found most governors and legislators, intimidated by the big tax revolt touched off by California's Proposition 13, in a painfully cautious mood. Few were about to forget that Ronald Reagan -- harping on the idea that government is the problem, not the solution -- sat in the White House and called the political tune.

A true list of what ballooned state budgets revolves heavily around the word ''federal'' -- federal cutbacks, federal court orders, federal mandates, federal indifference about a mounting tide of immigration.

California and Florida, for example, are faulted for having raised their budgets most rapidly during the '80s -- as if daily plane-, bus- and boatloads of immigrants could be absorbed free.

Critics of the states seem unaware that the '80s saw a wave of family dissolution, homelessness, AIDS, drugs and crack babies. Washington responded -- not by helping -- but by cutting back decisively on its aid to states and localities. Federal aid, in inflation-adjusted dollars, went from $110 billion in 1978 to $88 billion in 1982, to $96 billion in 1990.

To make things worse, the federally mandated Medicaid program for medically indigent people, split roughly 50-50 between Washington and the states, grew 88 percent, in inflation-adjusted dollars, during the '80s.

Prison costs went through the roof -- a product of social chaos and the ''book 'em, lock 'em up'' law-enforcement craze. The war on drugs more than doubled America's inmate population in 10 years.

Would critics of state spending open the prison doors now? Or what about schools? Would they repeal the massive increases in state-local education spending -- which more than doubled in the '80s? Do they believe our effort to match Japanese and other foreign education performance, or to pay teachers more decent wages, or to spend as much on kids in poor districts as rich ones, is just pandering to special interests?

The raw facts are that education, Medicaid, Aid to Families with Dependent Children and prisons accounted for 53 percent of state general funds last year, and are not about to abate. In 1990, when average state spending rose 9.4 percent, corrections and Medicaid both soared 17 percent. Unless some miraculous cures are found for our messed up medical-care systems,

Medicaid costs are expected to double again in the next five years.

It is fair to challenge states to use the current season of budgetary bloodletting to redesign the most critical services they deliver. So far, precious few are doing that.

Budget woes will never end unless states find more efficient, economic ways to do business. Social and school and prison costs will continue to soar, for example, until we learn how to better help poor families escape the treadmill of intergenerational failure. Yet success on the social front could translate into sensational long-term savings, human and financial.

Our dependence on the states isn't about to subside. President Bush is telling governors and state legislators, on every front from transportation to education to drug prevention, that they'll have to pick up the brunt of costs for America's new domestic efforts in the '90s.

You can argue, in fact, that the performance of the 50 state governments, their counties and cities, will increasingly add up to the United States' cumulative strength and resilience as we face the 21st century.

It's one thing to put the monkey on states' backs to perform more effectively. But it's silly to believe they could have survived this recession unscathed. And it's preposterous to suggest they can -- or should -- do their job on the cheap.

Neal Peirce is a syndicated columnist.

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