The editor’s opinion from Marketplace, Northeast Wisconsin’s business magazine. (Obligatory disclaimer: Most hyperlinks go to outside sites, and we’re not responsible for their content. And like fresh watermelon, peaches, pineapple, grapefruit, tomatoes and sweet corn, hyperlinks can go bad after a while.)

July 29, 2008

Misery loves company

The National Conference of State Legislatures reports that the number of states with budget problems is on the increase, due to what the NCSL calls "anemic revenue performance" (translation: we're not paying enough in taxes).

More than half the states are experiencing budget deficits, including, as we all know, Wisconsin. All but two Midwestern states, Indiana and Missouri, has a gap between revenues and expenditures. Three states, Illinois, Iowa and Minnesota, have budget gaps of 8 percent or more. Interestingly, all but one of those deficit-plagued states, Minnesota, has a Democratic governor, while Indiana's and Missouri's governors are Republicans. (Before you condemn this as a partisan slam, read on.)

Minnesota's governor is Republican Tim Pawlenty, who you may have read is apparently on John McCain's vice presidential short list (perhaps a list of one, in fact). This may not make conservatives happy, because Pawlenty's fiscal record as governor apparently leaves a lot to be desired — the National Taxpayers Union says his tax record "can rightly be described as a disaster for Minnesotans," complete with $1.74 billion in tax increases. Others, however, argue that Pawlenty "has reshaped Minnesota with fiscal restraint and the most taxpayer-friendly administration in the history of Minnesota," and that Pawlenty should not be blamed for vetoes that were overridden by "hostile liberal majorities."

The NCSL reports that few states (but not all, as we discovered Monday) are trying to close their budget gaps by "cutting spending and tapping reserves." This is laudable, if true. It would have been better, of course, for those states to have not increased spending that now needs cutting in the first place. Then again, the NCSL appears to like tax increases, given that they think that either federal gas tax needs an increase or a vehicle-miles-based tax needs to be enacted in an era of $4-per-gallon gas.

Wisconsin's current fiscal woes date back to the 1990s, when Republican Gov. Tommy Thompson decided that a booming economy meant the state could increase spending and cut some taxes. Thompson was clearly preferable to any of his opponents, but taxes and spending were and are too high in this state, and current experience demonstrates that just because you can afford high levels of government spending at a particular time doesn't mean you'll always be able to afford it. But most voters in Wisconsin apparently don't care about either taxes or spending, or they may say they care, but they don't vote like they care.

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