LANSING – The Michigan economy, the housing collapse and what that means for state budgets are running themes in State of the State messages delivered by governors across the country this year. While Michigan remains among the worst states in economic performance and consistently at the bottom in unemployment rates, the growing concern about the economy is evident in the speeches that have been issued in 31 of the 50 states.
The change in tone is striking compared to a year ago, and the problems facing a few of the states make Michigan’s $1 billion deficit last year seem modest.
Consider New Jersey, which is facing a $30 billion debt or California with a $14 billion deficit.
New Jersey Democratic Governor Jon Corzine, who proposed a 50 percent increase in turnpike tolls that would take care of $16 billion of the debt, said the state faces a financial emergency. Other major proposals were freezing state spending, tying future spending to revenue growth and requiring voter approval of future debt that does not have a dedicated revenue source.
In his January 8 speech, he said, “We are in a hole, and if we want to get out, we have to stop digging. Pigs will fly over the Statehouse before there’s a realistic level of new taxes or spending cuts that can fix this mess.”
California’s financial mess is a factor in the apparent derailing of Republican Governor Arnold Schwarzenegger’s ambitious health care proposal that included mandatory insurance coverage by all households. While the state Assembly approved the plan in December, the state Senate is poised to kill it this week with some Democrats joining Republicans in raising new opposition to the plan.
Schwarzenegger had tried to fend that off in his January 8 speech, in which he urged the state to face its “budget demons” and proposed a new constitutional amendment to control spending.
“Now, I understand the concern that we have now a deficit, and that our plan is maybe too daring, or too bold, or expensive. But sometimes you have to be daring, because the need is so great,” he said.
Closer to Michigan, Wisconsin Democratic Governor Jim Doyle’s speech last week was geared to prepare the state for an economic downturn, largely laying blame at the feet of federal officials who he said for more than 10 years have failed to address the “loss of manufacturing jobs, spiraling health care costs, and our reliance on fossil fuels.” He called for building the state’s economy through innovation, research and development.
In Maryland, Democratic Governor Martin O’Malley’s proposal to deal with the subprime mortgage crisis was a promise to help families at risk of losing their homes by lengthening the time it takes for banks to foreclose and increasing oversight of the lending industry.
Some other states with budget problems:
In Mississippi, whose post-Katrina economy has rivaled Michigan’s auto-dependent economy for producing high unemployment, Republican Governor Haley Barbour dug a line in the sand against new debt and pledged to increase the state’s rainy day fund. Calling for the state to cut up its credit cards, he said in his January 21 speech, “I will oppose authorizing any new state debt during this session of the Legislature unless it’s related to creating jobs.”
New Kentucky Democratic Governor Steve Beshear turned to Shakespeare’s Julius Caesar for an analogy of the battle over the budget that lies ahead to an upcoming military battle led by Brutus. “What we face is no less daunting. Unless we get our financial house in order and chart a new course, Kentucky stands little chance of succeeding in this new economy,” he said.
Maine, which also is struggling with high unemployment, has a relatively large deficit of $95 million. “The national economy is struggling under the weight of declining home values. We are forced to make hard decisions and set priorities,” said Democratic Governor John Baldacci in a January 9 speech that eschewed tax increases and called for a smaller government.
Other budget shortfalls facing states include the $1 billion in Arizona and Rhode Island, where Republican Governor Donald Carcieri proposed reducing $300 million to deal with a budget crisis though lower employee salaries/benefits (he would switch the retirement system to a 401k setup), payments to local government and social services cuts.
Some states have had a better financial picture, such as Georgia where Republican Governor Sonny Perdue proposed several new programs, including a $120 million plan to built reservoirs and water/sewer improvements to deal with the effects of a two-year drought. His January 16 speech and budget recommendations also included a surprise $30 property tax cut per household, money for more state troopers, increased aid for local transportation projects and improvements to trauma centers.
On some other key issues:
EDUCATION: Among the biggest headliners on the education front was the proposal in New York Democratic Governor Eliot Spitzer’s January 9 speech to lease the lottery to create a $4 billion endowment fund for colleges and universities costs. “We can’t strengthen our economy without the best colleges producing the best-prepared graduates. That’s why our goal must be to make an outstanding higher education affordable for every New Yorker,” he said.
All primary and secondary school students would be considered college-bound under a proposal by Colorado Democratic Governor Bill Ritter. He proposed extending all-day kindergarten, sending counselors to middle and high schools to help students get into college, and making students from pre-school to high school verify what they have learned through “a seamless system of expectations, policies and tools.”
In his January 10 speech, Ritter described his proposals as “the most revolutionary shift in education policy this state has seen in years”
All-day kindergarten programs were also proposed in Massachusetts and Kansas where in a January 14 speech Democratic Governor Kathleen Sebelius called for more money for all-day kindergarten. She said an educated workforce is a key to future economic prosperity.
Higher education was the focus of the January 14 speech by Arizona Democratic Governor Janet Napolitano, who set a goal of doubling the number of undergraduate degrees by 2020. She called for a fixed, four-year tuition rate beginning with the 2009 freshmen class and a full-ride scholarship program for all high school graduates with a B average or better beginning with the 2012 class.
Schwarzenegger said California would be the first state to use its powers under the No Child Left Behind Law to intervene in school districts failing to meet achievement goals.
Doyle said Wisconsin teachers should be compensated based on factors such as hardest assignments, skills advancement and helping students achieve success.
HEALTH/SMOKING/TOBACCO TAX: Missouri Republican Governor Matt Blunt proposed the largest budget in state history to expand health care programs, but also asked for tens of millions of dollars in tax cuts. His January 15 address embraced a $400 million increase in spending on health care and education, including $348 million to insure low- and middle-income working parents and $137 million for the state’s replacement program for Medicaid.
Shortly after ending his presidential bid, New Mexico Democratic Governor Bill Richardson used his January 15 speech to propose universal health care by 2010.
Spitzer proposed using New York tax revenues to include 400,000 children in the Children’s Health Insurance Program that federal officials ruled ineligible for SCHIP and proposed grants to physicians willing to move to the state’s inner cities and rural areas. The grants would repay their medical school loans.
Maine already has a universal health care program that is considered
