State Budgets Badly Out-of-Whack

by John M. Curtis
(310) 204-8700

Copyright February 26, 2011
All Rights Reserved.                                             

                 Running deficits around the nation, the states must now suck it up and deal with their own budget woes, not expecting more bailouts from Uncle Sam.  Complaining of cash-flow problems due to the protracted recession and unemployment, states must come to grips honestly with the current budget mess plaguing many large and small-budget states.  Gathering in Washington for the annual governors’ conference, state executives must face squarely, like Wisconsin, unsustainable, unrealistic and outright fraudulent salaries and pensions systems currently breaking what seems like more fiscally responsible states.  “We have to balance our budgets.  We have to address costs.  And we also have to move forward at the same time,” said Maryland’s Democratic Gov. Martin O’Malley, drawing attention to deep economic flaws within state governments with respect to pensions and salaries.

            Today’s recession highlights problems that stem from excesses built into state governments.  Today’s high unemployment promises to rob state coffers of vital tax revenues for years to come, forcing states to take an honest inventory of where state governments went wrong.  Blaming budget problems only on lowered tax receipts fails to address egregious budget flaws within state governments.  Through years of collective bargaining from state unions, salaries and pensions have hit unsustainable levels, forcing states to question the current feasibility of state salaries and pensions.  California, for instance, pays Gov. Jerry Brown $175,000 a year, while the executive director of a West Los Angeles office of the state’s Regional Center earns over $350,000, plus hefty pension benefits.  When the City of Bell went broke last year the City Manger Robert Rizzo earned over $1.5 million.

               Rizzo’s regular salary was nearly four times that of the state governor, including future retirement benefits putting the state on the hook for 80% of his highest yearly salary.  While Rizzo’s a case of embezzlement, disproportionately high salaries and pension benefits plague state governments around nation.  Before the federal government hands states more bailouts, Uncle Sam has a right to know that state salaries and benefits are properly managed.  No state worker should have a salary higher than the state’s governor, it’s chief executive officer.  Federal authorities interfacing with state governments at the annual state governors’ conference must require an accounting of every state job, salary and pension benefit.  State salaries and pensions must be commensurate be with the state’s internal salary structures, requiring caps on state salaries and pensions.

            Salary and pension caps must be implemented across all categories of state jobs to assure some fiscal accountability.  As Wisconsin and numerous other states are finding out, no state can afford to give state workers a blank check in salaries and pensions.  Faced with runaway budget deficits, Republican Texas Gov. Rick Perry passed the buck to Washington.   “The fact is that Washington D.C. is trying to tell all of us how to run our states with way too much specificity and the costs of that is what’s driving the deficits in our country,” said Perry, showing bureaucratic denial about how Texas pays its salaries and pensions to state employees.  Texas officials like to blame states like California for living beyond its means.  Now that Texas faces the same problems, it’s  Washington’s fault.  Perry must get real, like California’s Jerry Brown, and audit state salaries and pension benefits.

               Experienced governors, like Brown, must lead the way in honestly dealing to runaway salaries and pension costs.  Today’s budget problems stem not only from a protracted recession but years of union and non-union pressure to increase salaries and benefits.  Apart from lowered tax revenues, most states have unsustainable salary and pension systems.  Fiscally conservative states like Texas are no exception.  Before bashing unions for states’ budget problems, every state salary and pension benefit must be audited.  Salary freezes won’t correct imbalances that leave salaries and pensions badly out-of-whack.  “Governors are focusing on consolidation, streamlining bureaucratic processes and controlling employee and pension costs, while at the same time doing as much as they can to spur job growth,” said John Thomasian, director of the National Governors’ Assn. Center of Best Practices.

            To deal responsibly with states’ fiscal woes, the nation’s governors must stop the partisan drumbeat and get down to business.  In good economic times or bad, no state can afford the current salary and pension structures that break state treasuries.  Pointing fingers at Washington doesn’t reverse the excesses in salaries and pensions that leave minor state employees earning more than state governors.  Raising taxes or threatening mass layoffs also doesn’t deal with systemic state salary and pension structures currently strangling state governments.  Wisconsin’s recent attempt to strip unions of collective bargaining puts too much blame on public employee unions and not enough on states to properly audit and cap state salaries and pensions.  Only by a systematic audit of state salaries and pensions can states begin to correct the gross imbalances that leave states strapped of cash.

John M. Curtis writes politically neutral commentary analyzing spin in national and global news. He's editor of OnlineColumnist.com and author of Dodging The Bullet and Operation Charisma.

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