Jay Evensen
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States with budget deficits could hurt the prosperous ones

5/27/2015

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Chicago skyline. Illinois is dealing with huge deficits.
Utahns have plenty of reasons to be skeptical of the budget decisions state lawmakers made this year. Despite a surplus of about $700 million, they made sure you will pay more in property and gas taxes, and quite possibly sales tax, depending on what your local government wants to do.

Who knew prosperity could be so expensive?


And yet, it’s hard to find fault with the big picture. The surplus, at least, is an indication that someone has been making good decisions.

Living here, you might reasonably assume the Great Recession is a fading memory in the nation’s history. You would be wrong.

A recent Associated Press analysis has determined that 22 states are projecting budget deficits this year. I’m no math genius, but that sounds pretty much close to half — a large number considering the recession officially ended in 2009.

Two lessons may be drawn from this. One is that fiscal responsibility is a type of hedge against a downward spiral of irresponsible decisions. Once a crisis hits, bad ideas come tumbling in like unwanted party guests, and they start sounding reasonable.

Arizona sold its state capitol and other public buildings during the worst months of the recession in a lease buy-back deal to make ends meet. Alabama currently is wrestling with whether to allow casino gambling and a state lottery.

If it approves this move, Alabama likely would join other states that have engaged in aggressive campaigns to encourage gambling, mainly among problem gamblers — your tax dollars irresponsibly at work.

A strong Utah economy keeps people who advocate these sorts of decisions far away.

The second lesson is that Utah ought to take the time now to prepare for the next slowdown. Standard & Poor’s has called the financial troubles of those 22 states an “early warning.”

Or, as credit analyst Gabriel Petek told the Associated Press, any state that hasn’t gotten its act together all these years after the recession makes you wonder, “what will be its condition when the next slowdown strikes?”

And what would be the effect on the other 28 states?

Among the states with the worst deficits is Illinois, where newly elected Gov. Bruce Rauner has to find a way to erase $6 billion worth of overspending. Pennsylvania faces a $2.3 billion deficit, according to multistate.com.

As difficult as it will be for those states to pass balanced budgets, imagine the political pressure on Washington should the economy take a turn for the worse, leading to a further drop in tax revenues.

And for its part, Washington has done nothing serious at all about its mounting debt. A mildly successful national economy has taken pressure off Congress and the president to do anything drastic. Annual deficits are falling, and even a Republican majority is back to spending money it doesn’t have. A recent headline on thehill.com said it all, “Washington is ready to spend.” But a failure to come to grips with the long-term prospect of runaway spending on Social Security, Medicare and health care doesn’t mean there won’t be a day of reckoning.

In Utah, economic reports from April are in, and the good times just keep rolling. Jobs grew by 4 percent, or 52,500, over April in 2014. Unemployment is at 3.4 percent. Of the many economic sectors in the state, only mining and natural resources lost jobs during that time, according to the state Department of Workforce Services.

As much as people, myself included, dislike tax increases, Utah lawmakers have shown a willingness to do more than just endlessly cut funding for things such as highway repairs and education. That doesn’t mean they did the right things, however. The increases won’t do much in the long-term. Gas taxes are losing effectiveness as cars become more efficient and alternative fuels more effective. Education is in need of radical reforms, not just more money.

But from a fiscal point of view, the state is in good shape. A lot of good things are in place, signaling years of prosperity.

That may not last long if the rest of the nation doesn’t get its act together.

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    The author

    Jay Evensen is the Senior Editorial Columnist of the Deseret News. He has nearly 40 years experience as a reporter, editor and editorial writer in Oklahoma, New York City, Las Vegas and Salt Lake City. He also has been an adjunct journalism professor at Brigham Young and Weber State universities.

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