State Senator Mary Lazich (R-New Berlin) represents parts of four counties: Milwaukee, Waukesha, Racine, and Walworth. Her Senate District 28 includes New Berlin, Franklin, Greendale, Hales Corners, Muskego, Waterford, Big Bend, the town of Vernon and parts of Greenfield, East Troy, and Mukwonago. Senator Lazich has been in the Legislature for more than a decade. She considers herself a tireless crusader for lower taxes, reduced spending and smaller government.
“Congress does not have the magic wand to help the states.”
That was the title of a blog I wrote during January 2009 and its message bears repeating.
Despite Washington’s huge gift-wrapped stimulus packages to the states, the goodies won’t be nearly good enough. About half of any stimulus money sent to a state, Wisconsin for example, cannot be used to fix a large budget hole. Some projections show the cumulative deficit of all 50 states ranges between $312 and $350 billion. The stimulus package approved by Congress would still leave the states with total deficits between $162 and $200 billion to fill on their own.
Michael Hill of the Associated Press reports on the stark reality that once the stimulus money arrives and is all spent, and once the national recession ends, many states will still suffer huge deficits. I repeat, there is not a magic wand.
Hill breaks down this mess:
“Spending increases were easier to cover in flush times earlier this decade, when tax collections jumped 40 percent over five years. Then the bubble burst. Inflated housing wealth collapsed, consumers hunkered down, businesses slashed jobs and tax collections plunged.”
Hill quotes Mark Vitner, senior economist and managing director at Wachovia who says state governments have few options:
“They're going to have to cut their budgets significantly."
Another alternative, one embraced by Governor Doyle that I reject, is increasing taxes and fees. Grabbing more money from taxpayers experiencing salary freezes or cuts, layoffs, or termination is not only difficult, it is wrong.
When jobs are lost, incoming tax revenue is reduced. Consumers filled with anxiety make fewer purchases, especially big ticket items, affecting retail sales. Recovery could take awhile, and even when the economy brightens, experts agree, state governments always lag behind in getting their fiscal houses in order. When the recession is over, hard times will persist.
You can read Michael Hill’s article that was printed in the Janesville Gazette.