A new crop of Republican governors is leading a historic retrenchment in the reach of state and local government as they confront a once-in-a-lifetime budget crisis by reducing both spending and taxes.
Across the country, governors and legislators are moving to squeeze the pay and benefits of state and local government workers, privatize a wide range of public services and facilities, and sharply reduce state funding for programs that were once all but untouchable, including public schools, universities and unemployment benefits. They’re aiming to close budget gaps projected to be a cumulative $125 billion next year.
“What we are seeing is a fundamental shift,” Susan K. Urahn, managing director of the Pew Center on the States, said. “Folks have been talking for a long time about the new normal. What you are beginning to see is what the new normal looks like.”
Just as the deep recession created a political opening for President Obama to pass a huge economic stimulus package that included many policies long sought by liberal activists, many GOP governors are using state budget crises to pursue long-held policy ideas such as tax cuts, the expansion of school vouchers and limitations on collective bargaining for public employees.
With a few notable exceptions, the changes are being pursued by governors who refuse to raise taxes, and some are moving aggressively to lower them for corporations and the wealthy. The governors, many elected with the support of tea party activists while promising to sharply curtail spending, view the changes as crucial to improving the economic climates in their states.
The changes are playing out dramatically in Michigan, where lawmakers this week passed legislation to sharply reduce how long people can collect unemployment benefits to 20 weeks. Newly elected Gov. Rick Snyder (R) intends to sign the bill early next week, aides said. The move came one week after Snyder enacted legislation that would allow him to appoint emergency financial managers with power to fire local officials, tear up union contracts, eliminate services and even declare bankruptcy in financially distressed local governments.
New Republican governors in Wisconsin and Ohio have moved to sharply curtail the compensation and collective bargaining rights of public employees while proposing austere new budgets that envision both tax cuts and deep reductions in aid to schools and local governments.
In Wisconsin, a judge’s order last week temporarily blocked implementation of the measure curbing collective bargaining. But officials said the law would go into effect Saturday after it was published by the nonpartisan Legislative Reference Bureau despite the court order.
“What we’re seeing in these states is a dramatic reversal in the role of state and local government, cutting support for schools, public safety and the jobless, and putting money back into the pockets of corporations and the richest Americans,” said AFL-CIO President Richard Trumka.
In a move supported by Gov. Rick Scott (R), Florida lawmakers are considering legislation to reduce the maximum amount of time people can collect state-sponsored unemployment benefits from 26 weeks to as little as 12 weeks. The measure is gaining momentum even as the state struggles with an 11.9 percent unemployment rate.
In Pennsylvania, new Gov. Tom Corbett (R) has proposed a budget that would cut the state’s higher-education funding in half, which could lead to closed campuses and sharp tuition increases. Corbett also has proposed big cuts in state aid to public schools. Liberal lawmakers and progressive groups have criticized him for refusing to place a modest levy on the growing gas-drilling efforts in the state’s Marcellus Shale, which could offset many of the proposed education cuts.
Lawmakers in Arizona are considering a measure that would require the state’s largest cities to allow private firms to bid on providing many municipal services. Michigan legislators are mulling over a bill that would force local school systems to put support services including bus transportation and custodial work out to bid.
Some Democratic governors are pursuing similar courses. New York’s Andrew M. Cuomo (D) has proposed deep service cuts as well as the elimination of a tax surcharge on income above $200,000 a year. California Gov. Jerry Brown (D) has proposed severe service cuts, although he is also struggling to win support for a referendum to extend a series of temporary tax increases to help close his state’s $26 billion budget deficit.
“There is concern at every level of government that things seem to be spinning out of control,” said Andrew G. Biggs, a resident scholar at the American Enterprise Institute, adding that some of the worry about states being on the edge of default is “overblown.” Still, he said, “I am having a hard time thinking of when there was as much concern over government spending.”
The tightening scope of state government comes after a long era of expansion. Between 1979 and 2007, state spending grew at an average rate of 6.5 percent a year as states assumed greater responsibility for services such as health care, education funding and homeland security, according to the National Governors Association.
But those increases have been reversed by the withering recession. In 2009, states’ general-fund spending was down 3.4 percent, and it decreased an additional 5.4 percent the next year, according to the National Association of State Budget Officers.
Although many states increased taxes and fees to help them through the downturn, new taxes are politically out of the question in most parts of the country. Instead, governors -- including Cuomo, New Jersey’s Chris Christie (R), Wisconsin’s Scott Walker (R) and Ohio’s John Kasich (R) — are moving to reduce taxes on corporations and high-income individuals in hopes of spurring job creation.
“After the tea party successes in last fall’s elections, you have a lot of legislatures where tax increases are completely off the table,” said James Sherk, a senior policy analyst at the Heritage Foundation, a conservative research organization.
In Idaho, lawmakers stripped teachers of most of their collective bargaining rights. Similarly, collective bargaining rights have been curbed for public employees in Ohio and Wisconsin. Budgets in both states call for expansion of charter schools and school vouchers.
Also, many local governments are going to have to make do with less state aid, forcing cuts there.
Donna Cooper, a senior fellow at the Center for American Progress and a former state government official in Pennsylvania, said the longest-lasting legacy from the new era in state government is likely to be the emphasis on lowering taxes.
“The statehouses are relieving tax burdens on large corporations and wealthy individuals and shifting more costs to middle-class families,” she said. “That is a fundamental shift that is happening fast. And it is going to be hard to get that back.”