State Spending Booms While Economy Suffers

November 11, 2008

A USA Today story gives readers a good idea why state governments are falling short of revenue — they’re spending even faster now than they were a year ago when the economy was doing much better. From reporter Dennis Cauchon’s story:

Even as the economy slides into recession, many state and local governments continue to spend freely and expand their workforces.

State and local spending jumped 7.4% in the third quarter compared with a year earlier, the U.S. Bureau of Economic Analysis reports.

New hiring has been responsible for much of the spending surge. While some new hires may “pay for themselves” — such as New York City Mayor Bloomberg’s plan to hire more traffic enforcement officers to write tickets for blocking the box, most new government employees are not revenue-raisers. They are long-term commitments for taxpayers to pay comparatively high salaries and generous pensions at a time when the states have little reason to think they can afford to.

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