Wednesday, June 23, 2010

PS427: State budget cuts: across the board, and at cross-purposes

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State budget cuts: across the board, and at cross-purposes


Almost every state has suffered budget shortfalls in the wake of the 2008 recession. How states have coped with cuts is varied and of varied effectiveness.

Discuss: Why do states find it difficult to adopt effective budget cutting strategies?

Why are some states more successful than others in dealing with budget problems?

Will these cuts be restored once the economy recovers or are they likely to result in permanent reductions?

Which budget areas of state government are "easy" to cut and which are "hard"? Why?

Why don't they just cut "waste, fraud and abuse" to solve the budget difficulties?

8 comments:

  1. Its seems when it comes to solving budget problems there are two solutions: raising taxes or reducing spending. Neither of these options are very good. For spending cuts states have adopted several strategies , furloughs, just plain reducing funding and cutting jobs. From my understanding of how the furloughs work they will end up doing more harm in the long run. With the goal of cutting spending now, it will end up costing the state lost income that could have been gained, but is now gone since the state employees were furloughed. Long term solutions must be considered opposed to short term cost cutting measures.
    States always face resistance when they cut any type of programs. I would like to think that the state government would only fund necessary programs. Citizens except a certain level of support from the government, services like social security and Medicare, so when programs like these are cut, there is outrage. Education appears to be the easiest sector to cut. Reducing programs like music and art, and cutting teachers will have little short term repercussions which makes the cuts easier to justify. In the long term, larger classes sizes will harm K-12 education.
    In some states other issues like an aging or a larger illegal immigrant population can put even more stress upon state run services. So in states like California where the budget is already deep in the hole, these issues don't make solving the problem any easier.
    If there were easy ways to cut funding that would have little impact, they would already be done. So saying cut "waste, fraud and abuse" is easier said than done. It should still be done since in the long term it will help, but it is no easy matter.
    As the economy recovers, hopefully less people will be dependent on government run services because they will have employment and health care, but funding to education or other services will not simply become less. More money may become available that could be put towards there to rehire teachers, restart programs that are now being cut.
    The other option is raising taxes. In a tough economic time raising taxes is difficult. One possible solution would be to tax those that are wealthier. While they are having a ‘tough’ time as well, they still have enough to put food on the table. So these taxes could make a small difference.

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  2. Every state faces difficulties when it comes to cutting costs. In most cases, elected officials want to adopt policies that have instant results since their job retention is based on elections decided by the people they represent. In order to be immediately effective, obviously money is going to need to be collected within - at most - a two year span. So it makes sense that jobs are cut.
    It seems like the easiest areas to cut are the government bodies that oversee only one particular field, since their duties could potentially be consolidated under some other body. Broad-sweeping reform is never universally accepted, but if one department could do the work of two, then it's necessary to get rid of one.
    Unfortunately, education - specifically teachers - are being cut. Under many circumstances it's the youngest teachers, too. These cuts are difficult, especially since education could produce kids who enact effective policy solutions in the future. Instead of relying on seniority to determine which teachers should be cut, a results-based scale should be used. The better a teacher performs, the more likely they are to keep a job. The same could be said for any job field.
    Instead of cutting jobs, lowering salaries across the board makes more sense. If everyone accepted a salary-cut, jobs could be saved immediately and in the future.
    Also, governments like the state of Wisconsin should raise taxes on commodities that are perceived as traditional - like alcohol. The beer tax hasn't been raised in Wisconsin for 41 years, and people already pay ridiculous prices at bars for a drink, so a few extra pennies wouldn't change their minds. Especially when cigarettes are taxed so highly, it would make sense to hold alcohol to the same standards.
    Policies like job-cutting and tax hikes are never going to be welcomed with open arms. Over time, if the economy regains momentum, departments could hire more employees instead of raising salaries or pay-rates.

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  3. A multitude of reasons can be given why states find it difficult to adopt effective budget cutting strategies. For one, many states appear to want instant change without actually performing much research to achieve this change. This is evidenced by Louisiana in which the state desired change, yet only allowed four months to find ways of cutting state spending. Clearly, for an effective strategy the state must spend more time researching this. Just as California was a failure in it trying to save money with having employees in the Franchise Tax Board; the lack of time hurt the employees ability to perform necessary research. States must spend more time to research ways of saving money instead of seeking short-term political gains. For any true success, the government must be willing to sacrifice short-term gain and political speech to ensure the long-term viability of these cuts.
    Once more, it appears uncertain if these cuts will be restored once the economy is recovered if the cuts prove to create a more efficient and leaner government, though some of the cuts are likely a temporary fix that may have detrimental results and will therefore restored once the economy recovers if not sooner. Many of the employees who are retiring or retiring early positions may not be replaced due to the natural downsizing of government. Cuts that are likely difficult in regards to early retirement are those of teachers who are a vital part of teaching the future generations. This can lead to the ability to hire younger and less costly educators to teach our youth; nevertheless, no one cut is truly easy due to the person element involved in such a cut. Lastly, so called “waste, fraud and abuse” is difficult to actual contextualize and cut due to the political consequences or lack of lucidity in what is actually under this definition.

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  4. States budgets can be (and usually are) very complex for a variety of reasons. Politicians and government officials seeking re-election typically try to do something that may promote short-term change but does not create much assistance for the state in long-term since they need public appeal and constituent support. Another reason why budgets and budget cutting is difficult is because constituents (and politicians) have varying ideas of what is most important to keep, cut, tax, etc. You are never going to please everyone.
    I agree that Wisconsin, as well as other states, should find more creative ways to gain revenue without cutting back so immensely on important aspects of life such as education.
    Increasing the beer and/or alcohol tax is a great idea because people are still going to be willing to buy it...after all, we live in Wisconsin. A small increase in these types of taxes barely places a dent in the individual consumer's pocketbook but it could add up to be a great deal of money for Wisconsin as a whole.
    Job-cutting is the last thing that Wisconsin needs right now with an unemployment rate of almost 8%. Although it is lower than the national average, Wisconsin is still trying to hold on. We need to be able to attract businesses to our state so that more jobs may be created.

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  5. I think the toughest part of budget cutting strategies is time. When the economy fails it happens fast and without much warning. The natural response is to find quick solutions to save by budget cutting and layoffs. The problem with adopting effective budget cutting strategies is that it takes too long to implement, the economy falls fast and the easiest response is often budget cutting strategies that aren’t very effective (furloughs for example). I also think that budget problems are very unique to each state. California is enormous and faces much more complicated and exceptional problems such as the state’s civil service policies than Oregon or Vermont (two other states mentioned in the article). It’s also easier to cut programs that affect everyone equally so that the legislators are able to agree and to push the changes through faster. I think “waste, fraud and abuse” are much more difficult to cut because individual legislators will delay these cuts, and time is money in these economic days!

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  6. Every state is different as well as the people/government in them. So each state will be different in the plans they come up with and implement and what will work in one state may not always work in another state. It is always dfficult to make cuts, everything in the budget is important to at least one person, but it is impossible to give everyone what they want. Compromises need to be made for a state to successfully cut its spending. Some of these cuts may remain and some may not depending on how important it is to that particular state and its economy.

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  7. Any restriction one must face is greeted with hesitation and in the case of budget cuts it’s no surprise that states are struggling with how to go about fixing their deficits. While states have been taking the easy way out making cuts that effect the population as a whole; however, it seems that these sorts of cuts are inadequate in the long run. In order to actually make a dent in the deficits states must make the tough decisions that no state wants to make. It’s understandable that the states would first choose the path that would lead to the smallest amount of suffering for their constituents. By trying to spare their feelings though the state is only dragging its population further down and will result in more consequences.

    Furloughs are one of the broadly used solutions that are used by some states, such as California and here in Wisconsin. This is one of the ways that states thought they were doing their constituents a service and have found some individuals still displeased. I find this almost annoying considering the state our economy is in to even have a job at a time like this is something to be thankful for. The other alternative to furlough days would be numerous amounts of layoffs. Not to mention while both Wisconsin and California have turned to furloughs they are also using salary reductions to help restrict the number of jobs they need to cut.

    I like to see that some states are brainstorming and even letting the public to contribute ideas for budget cuts. I hope that Wisconsin takes a note from this book and take the necessary steps that are required to pull our state economy from this slump. If furloughs really don’t bring as much savings like the article predicts then it’s time for some fresh ideas.

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  8. Any restriction one must face is greeted with hesitation and in the case of budget cuts it’s no surprise that states are struggling with how to go about fixing their deficits. While states have been taking the easy way out making cuts that effect the population as a whole; however, it seems that these sorts of cuts are inadequate in the long run. In order to actually make a dent in the deficits states must make the tough decisions that no state wants to make. It’s understandable that the states would first choose the path that would lead to the smallest amount of suffering for their constituents. By trying to spare their feelings though the state is only dragging its population further down and will result in more consequences.

    Furloughs are one of the broadly used solutions that are used by some states, such as California and here in Wisconsin. This is one of the ways that states thought they were doing their constituents a service and have found some individuals still displeased. I find this almost annoying considering the state our economy is in to even have a job at a time like this is something to be thankful for. The other alternative to furlough days would be numerous amounts of layoffs. Not to mention while both Wisconsin and California have turned to furloughs they are also using salary reductions to help restrict the number of jobs they need to cut.

    I like to see that some states are brainstorming and even letting the public to contribute ideas for budget cuts. I hope that Wisconsin takes a note from this book and take the necessary steps that are required to pull our state economy from this slump. If furloughs really don’t bring as much savings like the article predicts then it’s time for some fresh ideas.

    ReplyDelete

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