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Associated Press Featured Article

November 21, 2010

GOP governors: Deep budget cuts are coming



SAN DIEGO (AP) — Incoming Republican governors from Pennsylvania to New Mexico are vowing to keep campaign promises to slice already cut–to–the–bone budgets and balance them without raising taxes.

In doing so, GOP leaders intent on conservative governance signaled a desire to try to fundamentally change state government, shrinking it significantly. And they acknowledged that could mean more job losses and service cuts to already recession–hammered states anticipating more budget trouble ahead.

"While we're all facing these challenges, there are incredible opportunities for us to go look at what the core missions of government were, and redefine the role," said South Carolina Gov.–elect Nikki Haley, adding that the institution was never intended to be all things to all people. "We're going to have to scale back."

"We have to be honest with the people of our states and say, 'This is going to hurt. We're going to struggle,'" Haley added. But she said she was confident that the GOP's remaking–government approach ultimately would make Republicans — and their states — stronger.

At the annual Republican Governors' Association conference this week in California, incoming and current GOP governors insisted that their methods — which Democratic critics deride as draconian — would prevent another bout of catastrophic fiscal conditions over the long term.

"Our foremost issue is certainly to close the deficit in a long–lasting way," said New Mexico Gov.–elect Susana Martinez, who said her state faces a roughly $452 million budget gap. For starters, she's proposed reducing the state employee payroll by 5 percent through attrition.

From Washington, D.C., to the states, Republicans are trying to regain the mantle of smaller government and fiscal discipline, principles GOP leaders acknowledge the party strayed from when it controlled the White House and Congress. Two weeks ago, voters fired Democrats up and down the ballot, betting on Republicans to fix the sluggish economy, rein in budget–busting deficits and limit the government's reach.

Come January, Republican governors will be in charge in 29 states, including some of those hit hardest by the recession. Nevada, Florida and New Mexico are among them.

"We have a two–year time window, basically until the 2012 elections, to prove ourselves, if we're going to do what we talked about doing," said incoming Oklahoma Gov. Mary Fallin, who aims to "right–size government" to fix a $650 million shortfall.

Although the federal government reports signs of economic growth, state fiscal conditions are expected to continue to deteriorate further after two straight years of crisis. The nonpartisan Center on Budget and Policy Priorities in Washington forecasts combined state deficits topping $140 billion in what could be the worst year yet.

Governors already have repeatedly cut budgets. Some have raised taxes.

Now billions of dollars in federal stimulus money is drying up, and states are fretting about the impact of Obama's sweeping health care law. Incoming GOP chief executives are left with few options to balance budgets without raising taxes.

Echoing many other GOP governors–elect, Nevada's Brian Sandoval called that option "the worst possible thing you can do" in the aftermath of recession.

So, some are eying changes to public employee pension systems. Others are considering selling state assets. Cutting the state payroll, too. And privatizing services the states now offer — like school busing in South Carolina — also is on the table.

In Wisconsin, with an estimated $2.7 billion shortfall, Gov.–elect Scott Walker wants to cancel a federally financed rail project. He calls it a boondoggle that will cost the state money to operate.

In Ohio, where a projected $8 billion gap looms, Gov.–elect John Kasich has called for shuttering the state Development Department in favor of a private, nonprofit board of corporate executives.

Pennsylvania's incoming governor, Tom Corbett, has proposed selling state–run liquor stores and cutting the state–vehicle fleet to fill a budget gap that could run as high as $5 billion.

"Because of the economic challenges that we have right now we probably have the greatest opportunity since the '80s to get this (overspending) under control," Corbett said. "We have to be responsible again."

In truth, governors' powers are limited to curtailing some stresses on their budgets. There's little they can do to jump–start the economy and boost state revenues without raising taxes. They can't stop an influx of illegal immigrants from inflating the costs of state services. And there's only so much they can do to about the health care law that includes costly federal mandates.

Not that they won't try.

The incoming RGA chairman, Texas Gov. Rick Perry, for one, has raised the possibility of opting out of the state–federal Medicaid program for the poor in favor of a state–funded insurance system that backers claim could be more efficient and less expensive.

Most if not all Republican governors are looking at how to block parts of Obama's health care law.

"It's going to bankrupt us," said Rick Scott, Florida's next chief executive, who once ran a sprawling health care company. Besides targeting the health care law, he also has vowed to simultaneously return spending to 2004 levels and eliminate corporate income taxes. Florida faces an estimated $2.5 billion deficit.






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