Following the constitutional mandate to maintain fiscal balance in our state’s finances, the governor has ordered across the board cuts up to 7%, impacting most every agency and department of the state. In this way, the budget that the legislature and governor approved will remain in tact, but will be revised proportionally smaller to match smaller projected revenues.
The governor is following the advice of the state’s budget forecast, who now see that the impact of the European currency crises this spring and summer did ripple through the US economy and will cause revenues to come in lower then originally forecast.
Republicans Playing Politics
The minority leader and some local Republicans believe that we should call the legislature back into session instead of having the governor carry out the cuts.
After the silly season of the summer, now comes the political season.
Lets be very clear.
The Republican Party has not offered or presented a new state budget. They have no plan. But they have a message and would like you to pay for it.
If the legislature goes back into session, you the taxpayer will pay millions of dollars so that my esteemed Republican colleagues can use press coverage of the legislature to posture. Is this a good time to blow that kind of money on a futile political exercise?
There’s no economic, constitutional or public good that would be served by a special session.
January 2011
In January the legislature will reconvene as scheduled. At that time we will have complete August and September (back to school) and November and December (Christmas) shopping seasons behind us, and we will have a much clearer view of where our finances will be over the coming two years. The recovery, which for the moment consists of at least stopping the macro-economic decline, is now entering a new stage.
Despite the gloom of the spring, there are very hopeful signs that the recovery’s pause this summer is over. Industrial production, retail sales, and a number of other indicators have all turned positive. The long and painful process of sorting through bad mortgages is now well along. Interest rates are now at levels not seen since President Eisenhower.
Most importantly, households and companies are deleveraging, which is a fancy way of saying, families and firms are shedding debt. The balance sheets of many households and many companies are returning to a healthy balance. Whereas as our national rate of savings was virtually zero in the fall of 2006, we are now saving over 6% of our national income.
This means that as households have been postponing purchases, and enter the next retail season with more savings, a combination which means more spending as consumers very carefully made their delayed purchases, while maintaining better savings. It also means more savings available for business to utilize as capital for reinvestment, re-tooling, updating, expanding or launching.
Let’s not spend taxpayer money to finance political posturing. January will allow us a better view of the road ahead, and a properly scheduled legislative session to deal with the budget and all other related state issues in a connected and coherent manner. Panic, political opportunism and phony populism are luxuries we can ill afford.
