Balancing State Budgets the Smart Way
March 24, 2010
I have a piece on The Daily Caller today about balancing state budgets. An excerpt:
Nationwide, after growing at twice the rate of inflation and population growth during the boom, state revenues skidded 12 percent last year leaving budgets awash in red ink. States spent 2009 hitting up smokers for more taxes, holding tax amnesties, or adopting one-time gimmicks. Some started the year engaging in wishful thinking about tax revenues, even though tax collections historically recover only after the general economic recovery. As reality confronts the projections, budget gaps will reopen. Others will engage in accounting trickery or one-time gimmicks like California.
There are other options to put states on sounder legal footing. Here are five ideas for states to help both short-term and long-term fiscal woes:
Read the rest here. My prescriptions include prioritizing appropriations, reviewing tax expenditures, broadening sales taxes and lowering rates, reducing reliance on volatile revenue sources, and establishing rainy day funds and spending restraints.
I elaborated more on these ideas in a podcast I did a few weeks ago with the Mercatus Center. Listen to it below (about 16 minutes):
More on state tax and budget policy here.