Sure, we could eliminate all investment in needed water-treatment facilities, close libraries and parks, cut funding for law enforcement, DNA databases, and Innocence Projects, and abolish summer programs for kids. But that is not the government most of us want.
Compounding this misery, these state economies have for too long been based on an antiquated industrial model, which governors are trying desperately to retool. Whether in Michigan (disappearing auto jobs), California (shrinking high-tech sector), North Carolina (vanishing textile and furniture industry), or New York (cratering financial sector), governors are searching for a transformational fix to restart the job-creation engine. Yet this requires significant investment capital. The most promising ideas—increased higher education to foster the knowledge-based economy, high-speed rail to create efficient and environmentally sound transportation in our densest corridors, universal high-speed Internet access, and venture funds to create bio-tech startups—all require the one resource not available: money.
It is too bad the federal stimulus package did not require the sort of politically challenging yet necessary changes that would begin to alter the condition of state finances for the long term. The federal government could have used the opportunity to break the status quo over pension obligations, Medicaid structure, mandated services for health insurance programs, and teacher merit pay.
As the elected officials charged with paying for essential services using revenue sources that are directly correlated to economic cycles, governors have no easy remedies, and not even many hard ones.