Senior Vice President for State Fiscal Policy
Last night’s CBS “60 Minutes” piece on state budgets made some important points but also — through some big mistakes and omissions — gave a deeply misleading impression of the state budget situation.
Here’s what it got right:
Here’s what “60 Minutes” got wrong:
Most importantly, the “60 Minutes” story left the impression that states are so out of whack that there are no reasonable solutions to their financial problems. In reality, states have successfully closed several hundred billion dollars in budget gaps over the last three years through spending cuts and tax increases, a point the story overlooked.
Yet states need to do more. They can address their budget problems and lay the groundwork for future economic success by taking a balanced approach to the problem.
For example, states can establish formal procedures to determine the relative effectiveness of various budget expenditures in meeting specified goals and then cut spending that they judge has been least effective in reaching agreed-upon goals. States can also improve efficiencies in areas like corrections and economic development, modernize their tax codes (which in many cases are badly outdated), and collect new revenues to replace those lost to the recession. Prudent steps like these — not scare-talk about “the next financial meltdown” — are what states need to return to fiscal health.