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Weaning Dependent, Spending-Addicted States From the Enabling Feds

Leonard Gilroy
February 2, 2010, 2:18pm

West Virginia Gov. Joe Manchin offers a fiscal reality check for cash-strapped states in this Charleston Daily Mail piece today. The basic message is that governors need to wean themselves from the federal purse, grow up and make the tough, adult decisions needed to get their own fiscal houses in order (emphasis mine):
Gov. Joe Manchin has some advice for his fellow governors: Quit relying on federal stimulus money to balance their budgets.

Manchin is immediate past president of the Council of State Governments. He recently was chairman of the Democratic Governors Association and president of the Southern Governors Association. He will become chairman of the National Governors Association in July.

"Governors are telling me, 'We can't make it unless we get more stimulus,' " Manchin told leaders of West Virginia's natural gas industry last week.

He said the problem is, "I know if you send me more without any strings, I'll keep depending on it.

"I've said every state is becoming more dependent on the federal government," Manchin said. "We have a National Governor's Association meeting every year at the White House. They're doing everything they know to do. The only problem is, if you give me something, the first year I'm appreciative. Then the next year, I'm expecting it. If I don't get it the third year, I'm mad. It's just human nature.

"I've told my fellow governors we've got to get out of this. Rather than me waiting around to see how much you're going to send me, I should ask, 'Have I set my priorities straight?' 'Does the constitution require this spending?' 'Is it required by law?' We adjust laws every day. 'Is it required by an executive order?' " [...]

"We're at 8.6 percent unemployment in West Virginia; the nation is over 10 percent," Manchin said last week. "Did the stimulus help us from going deeper in the hole? I don't think there's an appetite for a second round."

Manchin said the revenues of the states aren't expected to bounce back until 2014.

"So whatever state you're from, if you think they're coming back soon, they're not," he said. "What that says is, you'd better have a course to navigate through this. Otherwise you'll be panicky and trying to fill holes. This is the last year I can use stimulus."
Aside from the fiscal folly associated with the increasing state reliance on federal revenues, how it simultaneously undermines our federalist system along the way should be equally troubling. We've already hit the point at which a majority of state revenues are drawn from federal sources, and without an intervention of sorts, this dysfunctional and destructive pattern of state dependency and federal enabling will only make it more painful for everyone when the day of fiscal reckoning comes. Actually, I'd argue that that day's been here for awhile now—it's just that it's only now starting to dawn on spending-addicted and cut-averse policymakers that states may be facing a fiscal lost decade.

Luckily some states have figured this out and are proactively moving down the path of reform, but generally speaking that's not the case in most of the country.


Leonard Gilroy is Director of Government Reform


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