Barbour sees sea of red ink for beleaguered states

Mississippi Gov. Haley Barbour said in an interview Thursday that he doesn’t expect recession-depressed state tax revenues to fully recover till 2015, long after the 2010 congressional elections and the 2012 presidential elections.

In an interview with editors and reporters at The Washington Times, the former Republican Party chairman said that President Obama’s stimulus spending only added to the states fiscal burden, as will the president’s proposed cap-and-trade climate bill and health care reform package.

It may be 2015 before revenues are back to where they were in 2008, he said. My state is pretty conservative and we are in much better shape than a lot, but even for us it’s going to be very hard.”

Mr. Barbour said he is not smart enough to predict the political impact of the bad economy but noted that job security drives consumer spending, which is 70 percent of the American economy.

Bad economies historically have spelled trouble for the party that controls the White House and the Congress, as the Democrats now do. Mr. Obama notes that he inherited a difficult economy and large budget deficit from the George W. Bush administration.

On a political note, Mr. Barbour said he will not make up his mind about seeking the 2012 Republican presidential nomination until after the 2010 congressional elections and the 37 gubernatorial elections that year. As president of the Republican Governors Association, he is the party’s point man on the gubernatorial races.

On health care reform, Mr. Barbour said he agreed with the Democratic Senate Majority Leader Harry Reid of Nevada, who complained this week that a leading Democratic proposal would hurt his home state. Mr. Reid has said the reform proposals as presently constituted would force states to boost taxes to pay for its “unfunded mandates.” Mr. Barbour said he and all the other governors pretty much agree with Mr. Reid on that score.

“There’s nothing about this [recession] that is very encouraging for state finances,” he said. “That’s why we don’t want the federal government to stick us with a huge unfunded mandate for health care reform through expanding Medicaid, because most states can’t pay for it but one way — raising taxes.”

Mr. Barbour said many states are broke and, unlike the federal government, don’t get to print or borrow money in order to spend more than they take in.

“People say, ‘Well you could cut spending.’ Look, I cut spending $172 million dollars earlier this month from the budget that was passed in June. My revenue’s down $380 million.”

He predicted that state governors will have to raise taxes or cut education spending drastically when federal stimulus funds run out.