Local Spending Is Out Of Control: 44 States Need A Federal Bailout
States are facing a great fiscal crisis. At least 44 states faced or are facing shortfalls in their budgets for this and/or next year, and severe fiscal problems are highly likely to continue into the following year as well. Combined budget gaps for the remainder of this fiscal year and state fiscal years 2010 and 2011 are estimated to total more than $350 billion.
These local officials can’t manage their own budgets, so they’re going to line up at the federal trough next to the bankers and the auto industry executives and the union bosses and demand their fair share out of the federal slop bucket. Because cutting back on spending just isn’t an option, right?
And what would more federal spending on these states do? For one thing it would just ensure that these states continue their irresponsible spending and budgeting ways. I mean, why spend your constituent’s dollars responsibly when the feds will just bail you out? All bailouts do nothing but prop up the status quo, and create an expectation for more bailouts. Which leads to the second point: Federal bailouts of local spending are going to mean less control at the local level. Federal money comes with strings attached. If local officials demand this money they’re going to have to jump through hoops to get it, and those hoops are designed in Washington DC.
Which is un-American. This country was founded as a federalist democracy. Our founders recognized that a one-size-fits-all national government creating one-size-fits-all policy for a nation as large and diverse as this one wouldn’t work. So instead of one national government running everything, we have one national government with limited duties and roles and 50 local governments for everything else. Or, at least, we did before local officials started abdicating responsibility to the federal government and/or the federal government started grabbing local power.
The state bailouts are going to be just the latest episode in the story of lost local control.
On a related note, for North Dakota readers, these national bailouts of state government mimic North Dakota’s problems with property taxes perfectly. Out of control local spending has driven up property taxes. Now, instead of reining in that spending, local officials are looking to the statewide government for a bailout. But that will have all the consequences of the states looking to the federal government for a bailout: Lost local control, and no incentives to spend responsibly.
One last note: While North Dakota may not be one of the states in trouble now, if we keep increasing spending like we did last legislative session and like it appears we’re going to this session we’re going to be in trouble soon.
