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May 05, 2004

States' Budgets: Back in Black

Not all of them, yet. But now thirty-two states expect a budget surplus this year.

From Florida to Oklahoma to Oregon, tax revenues are up in recent months from the same period last year, the first consistent increases many states have experienced since Wall Street's bubble burst in 2001.

If you believe that higher taxes & spending retard economic activity, you might be happy to learn...

Governors expect expenditures for their 2005 fiscal years to rise 2.8 percent from 2004, well below the 26-year average of 6.2 percent, the National Governors Association, which released its own survey of budgets on Monday, said. The growth in spending is up from the 0.6 percent increase in the last fiscal year, which was the smallest increase in 20 years, the association said.

"During the previous downturn in 1991, two-thirds of states filled their shortfalls by increasing taxes," said Raymond C. Scheppach, executive director of the governors' association. "This time, you've got the flip of that. Most states filled shortfalls by cutting budgets."

Which should mean that the boom might be even more prosperous than it otherwise would have been, had politicians simply jacked up tax rates during the downturn.

"We're going to need two to three years of fairly robust revenue growth to get it all comfortable," Mr. Scheppach added.

Why these guys, who, after all, are spending our hard-earned money, would think we'd want them to be "comfortable" is quite beyond us.

Is there any service for which you pay whose managers and employees you want to be "comfortable" with the money you're paying them? Wouldn't you rather have them a bit strapped, always looking for ways to economize, always checking the couch for coins?

If they're comfortable, you're probably being taken to the cleaners.

There would seem to be a fundamental divergence of interests between the government and the governed, here.

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posted by Ace at 07:32 AM

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