The topic of government pay and public sector unions keeps coming up, but the threads usually devolve into shouting matches. I’m hoping that we can have a civil thread that looks at the actual facts about these issues.
Since the economic crisis hit in 2012, many states and cities in the USA have faced budget disasters. California is the best-known case. In order to make up a budget shortfall, the state government was forced to furlough workers, shut down most government offices for a few days each month, and make drastic cuts to K-12 education, higher education, state parks, state highways, assistance to the poor, and many other areas. The same story has been playing out on a smaller scale all over the country. Naturally most people would prefer to not have such things happen in their state or city, or to not happen again if they’ve already happened once. It thus seems reasonable to ask why these things happened and what needs to be done to prevent them from happening again.
The first thing to note is that while the economic crisis was the immediate cause of government shortfalls because it cut revenue, that can’t be the end of the story. Part of a government’s job is to be aware of things that are happening in the world and to be prepared for obvious dangers such as a recession. Indeed, some state and city governments did that and made it through the past few years without having to take drastic measures. And we’ve been through recessions of various sizes before without having the consequences for state and local governments that we’re seeing this time. So the question that has to be asked is, why did some state and local governments put themselves in a situation where the recession forced disastrous cutbacks?
The second thing to note is that every government budget has two sides, revenue and spending. When there’s a shortfall, one can blame either low revenue, high spending, or both. Some have blamed California’s crisis on a 1973 resolution that makes it very difficult to raise taxes. However, California’s tax burden is one of the highest in the nation. If we look at the list, we see that 8 of the 10 states with the highest tax burdens as of 2009 were among those who had layoffs or furloughs in that year (New Jersey, New York, Rhode Island, California, Maryland, Hawaii, Ohio, and Wisconsin). There’s a similar story with cities. Detroit, currently the scene of a high-profile financial disaster, has a sky-high tax rate. I offer it as a postulate that a city or state with a tax rate well above average can’t get out of its budget hole by raising taxes even more.
So solving the budget crisis that some places are in, and averting repetition of such things, must involve looking at spending. Total state and local government spending has gone up 60% in since 2000, and realistically almost all the increase was in just 8 years, from 2000 to 2008. It’s not as if state and local governments were doing a great deal more in 2008 than they did in 2000. If anyone has offered a solution to the budget mess in California and other states that doesn’t involve chopping down the soaring salaries and pension benefits of public workers, I’m not aware of it.
Many try to phrase this as a Republican vs. Democrat issue, but it’s actually an issue of those who want a financial stable government vs. those who don’t seem to care. Some Democrats are willing to acknowledge the problems and try to fix it.