- The Washington Times - Friday, October 22, 2010

ANALYSIS/OPINION:

When it comes to state budgeting, it appears that many of our nation’s governors are studying at Hogwarts School of Witchcraft and Wizardry. It’s only too bad that their role models are those who focus on the dark arts of deception and deficits. The fiscal trickery of governors across the nation is leading us to a budget disaster independent of the budget problems of Washington that get all the attention.

On both sides of the aisle, governors seeking re-election in 2010 are meeting their states’ budget crises with a combination of increased taxes and budget gimmicks. Meanwhile, real budget reforms lag.

Several GOP governors deserve criticism for eschewing reforms in favor of raising taxes and increasing spending. Jan Brewer in Arizona raised sales taxes. Gary R. Herbert hiked cigarette taxes in Utah. C.L. Butch Otter of Idaho, Sean Parnell of Alaska and Dave Heinemann of Nebraska each plugged budget gaps with federal stimulus money and/or shifted money among various funds to achieve stopgap, kick-the-can-down-the-road budget relief.

Four governors, however, stand above the rest as true masters in budget sleight of hand - judging by grades for fiscal responsibility given out recently by the Cato Institute. The quartet is uniquely gifted at creating the illusion of responsibility while embracing the magic of accounting gimmicks and punishing tax increases. Voldemort would be proud of these wizards of public budget gimmickry - Iowa’s Chet Culver, Maryland’s Martin O'Malley, Massachusetts’ Deval Patrick and Illinois’ Pat Quinn.

Chet Culver, Iowa Democrat

Gov. Chet Culver is known to boast about Iowa’s balanced budget. But what many taxpayers don’t see is that while the general fund is technically in the black, that’s largely the result of what’s going on behind the curtain.

The Culver administration “balanced” last year’s budget by shifting $725 million in spending between the general fund and other state funds. By repeatedly raiding the Senior Living Trust Fund, Mr. Culver has destroyed it in just four years. This practice of moving money around has left local governments strapped for cash, necessitating local property tax increases of nearly $527 million over four years.

Mr. Culver also diverted $1.4 billion of federal stimulus money, intended to create jobs, to pay ongoing expenses.To make matters worse, the federal funds came with strings attached that will exacerbate the 2012 budget nightmare for Iowans by requiring an additional $1 billion in spending.

So, while the budget balance is a mirage, the deception is costing the people of Iowa real money.

Martin O'Malley, Maryland Democrat

Gov. Martin O'Malley is playing the same game with the people of Maryland. His publicly announced balanced budgets are purely creatures of accounting maneuvers. Last year, Mr. O'Malley withdrew $367 million from Maryland’s rainy day fund, and he has his sights set on withdrawing another $350 million this year.

Wall Street credit analysts are rightly dubious about Maryland’s financial health. They worry that the state is taking on too much debt, that Mr. O'Malley is failing to account for next year’s sharp drop-off in federal stimulus funds and that he is ignoring a growing structural imbalance between spending and revenues. Indeed, some analysts project that regularly incurred expenses in Maryland will outpace revenue by more than $2 billion a year through 2015.

Deval Patrick, Massachusetts Democrat

In a state legendary for high taxes, Gov. Deval Patrick is living up to the heritage. Over the past two years, Mr. Patrick reigned over $1.3 billion in tax increases, including $900 million in sales taxes combined with corporate and cigarette tax increases.

According to the Beacon Hill Institute of Public Policy, the standard budget-balancing maneuver for Massachusetts Democrats consists of temporary spending cuts and permanent tax increases. In the most recent bout of “budget balancing,” the governor relied on hundreds of millions of dollars from the federal government that ultimately didn’t materialize. The result has been a slew of one-time measures that make up for $1.36 billion of the $2.7 billion budget gap. And in the face of dramatically less money than anticipated, the governor still increased spending by $2.5 million from 2010 to 2011.

Massachusetts taxpayers shouldn’t be fooled by clever budgeting, short-term fixes and soaring taxes.

Pat Quinn, Illinois Democrat

The people of Illinois are suffering at the hands of Gov. Pat Quinn. He received the same well-deserved F from the Cato Institute as his predecessor, Rod Blagojevich, received prior to the latter’s resignation and trial.

While Mr. Quinn has refused to embrace real budget reform, shifted money among funds and spent federal stimulus money for ongoing operations, he deserves special recognition for the sheer audacity of his disregard for taxpayers and job producers in Illinois. Not only did he sign a $1.1 billion tax increase into law, he proposed raising personal and corporate sales tax rates from an already high 7.3 percent to a job-killing 9.7 percent. Faced with a revolt even from his own party, Mr. Quinn scaled back proposed tax increases to a still-staggering $2.8 billion annually.

More troubling still is the enormous bill mounting for next fiscal year - from this year’s expenses. The total for this year’s bills pushed off into next year may reach $8 billion by June 30, some experts say. This should be no big surprise to Illinois residents, as the state is borrowing millions to pay last year’s bills. See a pattern emerging?

Mr. Quinn’s specialty appears to be the vanishing wallet.

The American people need strong, innovate leadership to address the economic and budget challenges facing our states and our nation. They deserve realistic solutions to issues plaguing the states and undermining our economic vitality. If our country is to prosper, we must name the evil. Voldemort accounting can’t be allowed to stand.

Bob Williams is president of State Budget Solutions, where Bryan Leonard is a research fellow.

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