As new state governors and lawmakers prepare to take office, they should watch the following report from CBS' 60 Minutes about the states' coming 'day of reckoning' for their budgets.
Years of overspending by the states, especially on overly generous pensions and benefits for public employees, are now threatening the survival of the states because the economy cannot keep pace with the growth in budgets. As CBS' Steve Kroft notes in his report, “California, which faces a $19 billion budget deficit next year, has a credit rating approaching junk status. It now spends more money on public employee pensions than it does on the state university system, which had to increase its tuition by 32 percent."
He goes on to say that “Arizona is so desperate it sold off the state capitol, Supreme Court building and legislative chambers to a group of investors and now leases the buildings from their new owner. The state also eliminated Medicaid funding for most organ transplants.”
But of course, neither of these states compare to the disaster that is Illinois. Dan Hynes, Illinois state comptroller, says, “It’s fair to say that there are tens of thousands if not hundreds of thousands of people waiting to be paid by the state."
Kroft asks Hynes, “So, the state’s a deadbeat?”
“Yeah,” agrees the comptroller of Illinois.
States are now on the verge of fiscal insvolency. Unfortunately, few people, including politicians from Sacramento to Washington, D.C. seem to have noticed. Hopefully, by watching this story, the new crop of state leaders, most of whom were elected on a platform of fiscal responsibility, will notice and start to figure out ways to save states from disaster.