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 recessionA recession is a significant and sustained decline in the economy. Typically, a recession lasts longer than six months, but recovery from a recession can take a few years. , 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 taxA tax is a mandatory payment or charge collected by local, state, and national governments from individuals or businesses to cover the costs of general government services, goods, and activities. payers 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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