According to a recent report put out by the Tax Foundation, forty-five states face budget shortfalls. The total amount of this shortfall through FY 2010 will be approximately $132 billion. California faces the worse challenge with the state being virtually bankrupt.
The knee-jerk reaction for some is to increase taxes. Increase the gas tax we are hearing in Iowa. Raise taxes on alchohol, cigarettes, etc. Which is horrible tax policy. And today California just passed it’s largest tax hike ever which Governor Arnold Schwarzenegger is expected to sign (HT: Sweetness & Light). Not helpful in the midst of a recession.
Then comes the Federal government with the C.R.A.P. Porkulus plan saying, by the way, we are putting in an amendment that will allow State Legislatures to override their Governor if they decide to turn down the crap sandwich. Some have concerns of potential federally mandated social programs that will need to be footed by states later. This provision’s legality is sure to be tested as some fiscally conservative governors may not take this money.
But not every state finds itself in the precarious position that California and many other states find themselves in (largely based on increased spending when times were good). AP (American Pravada) says that lower oil prices are a “chink” in Alaska Governor Palin’s armor. Huh?
Read the transcript (excerpt below):
…When oil prices were high and the state was bringing in a ton of cash, the State of Alaska didn’t spend all the money on new unsustainable programs. They didn’t, you know, try to give everybody on the planet free healthcare. They didn’t search everywhere for places to dump money while claiming, you know, they were the wealthiest country on Earth, they are the wealthiest state in the land, this will go on forever. They didn’t do it. What they did is they saved.
…From the article, remember this is the article about the chink in Palin’s armor. “The state currently has $6.6 billion in its constitutional budget reserve fund.” $6.6 billion in their constitutional budget reserve fund,” that it could tap into. A few billion more is also available from other pockets said Juneau economist said Gregg Erickson, a long time Alaska budget watcher. Given Alaska’s robust reserves, the state is well prepared to weather the next two years, says Erickson. As to how long reserves will last after that, there are too many factors involved to say for sure.
This is the article that the oil reserve, the oil money not rolling in as fast is providing a chink in Sarah Palin’s armor! Now, I just want to make sure I understand this horrible problem that they face. They can unquestionably get through the next two years and for some undetermined amount of time after that, but California can’t make it through the next two minutes. Oh, yeah, and I forgot to mention this. The State of Alaska has socked away $1 billion in an education fund for the next school year, and education officials say there’s another billion that’s expected to go into the fund this year. So their two years of survival includes putting away a billion dollars for future school expenses, and Sarah Palin’s reaction to all of this, she’s calling for another $268 million to be cut out of the budget. Reductions. She has at least $7.6 billion in a bank account that she could be spending on moose museums named after Sarah Palin. “She built the Sarah Palin moose museum.” But she’s still cutting the fat.
Yes she is still cutting the fat by reducing the FY2010 spending plan by $445,500,000 (HT: Sarah Palin Report), which will put them in an even better position long term if this recession continues. The Weekly Standard today said and I agree, “if only the country were as well prepared to weather the next two years as Palin’s Alaska.”
Update: Dirty Democrats linked here.
2nd Update: Check out Angela Steven’s thoughts on this… thanks for the linkage Angela!