Monday, February 16, 2009
Legislature / Politics / Woods Governor Killing Our Buzz Over Stimulus Money
Posted by Jeff Woods on Mon, Feb 16, 2009 at 5:15 AM
This is really good news for two or three thousand state workers, who would have been fired en masse without the stimulus. Under the House version of the bill, all layoffs could have been avoided. What eventually passed chopped at least $900 million out of the state's money. Now, there still will be some as-yet unknown number of immediate layoffs, the governor says, but workforce reductions mainly can be achieved through attrition thanks to the stimulus money. Here's Bredesen at his latest media availability:
It will still require significant cuts in the state budget. This stimulus package is no panacea. It is no silver bullet. It will certainly take some of the hard edges off the cuts we'll have to make, but we're still going to have to make cuts and that could include layoffs. With the House package, I thought we could get to no layoffs. But I can't take $900 million out of that equation and say the same thing.
The last time he met with reporters, Finance Commissioner Dave Goetz was presenting the state's latest revenue numbers, which he described for the umpteenth month as "dismal."
"I'm running out of negative adjectives. It is dismal," he said of the $114 million drop in what had been budgeted for January. "This continues us well on a pace to a shortfall this year of over $1 billion. We don't really see any reasonable signs that this is going to turn around anytime soon."
Goetz went on to explain his thinking on when to cut the budget to adjust for the billion-dollar crater caused by the economic meltdown. He talked about how he'd prefer to walk downhill rather than fly off a cliff.
"The issue is, that's non-recurring money and it disappears in two years. So what you have to have is a plan for how you're going to get from here to there, so that in December of 2010 you are operating on a balanced basis once those federal funds disappear. Rather than having to do it in three months, you would have to do it in two years. It gives you time to use attrition. It gives you time to rethink in a little more thoughtful way some of things you have to do. But you still have to do it. We'll be working with our agencies to have plans. The question is do you have a cliff or a hill. If we did nothing, in 2010 we'd have a cliff and we'd just go flying off that cliff until we hit bottom."
As reasonable as all this sounds, it presents political difficulties. State lawmakers won't make tough decisions except in times of crisis, sometimes not even then. The governor will ask them to cut services, causing caterwauling by constituents, when they don't really have to do it yet. It's the right thing to do, which makes it unlikely.
Comments (5)
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@I don't have to type airplane?
Rep. Cooper didn't "switch his vote." The bill that came out of conference was substantially different from the version that the House originally voted on.
I know public policy is nuanced, and that's one reason why we have a constitutional republic instead of direct democracy.
Freddie
Would you care to elaborate on the substantive difference between the 2 bills?
My guess is that the change had more to do with the ad you posted on your website and the generally negative reaction to his first vote.
Thanks for the civics lesson.
With sales down and property values dropping, doesn't it make a little more sense to have some small kind of income-based tax? I'm not talking about the big tax figures you have in Illinois or Massachusetts. Just something to bring in a more balanced revenue stream. What would Laffer say about an income tax rate of 0%?
