6/20/11

Does the House Budget Really Close the Deficit?

I hope I'm wrong about this but my read of the news report on the budget deal unveiled by House Democrats late last week leaves me feeling that there's some smoke and mirrors going on here. There's virtually no gnashing of teeth over the tough choices that had to be made, which leads me to suspect that tough choices weren't made. My question is: where did they save?

There are some good things in that budget to be sure, particularly the move away from the governor's sales tax expansion and the elimination of longevity increases for state workers, but it's not readily apparent to me how the state closes the $186 million budget gap, as reported. State workers get their 3-percent pay increase, which will cost the state $25 million. There is $17 million in added funding for education - again a good thing - and also $12 million for transportation funding. Rite Care members will now have to pay higher co-pays, which hurts them but hardly amounts to serious savings - while costing the state $26 million.

As of this writing I have yet to hear the governor's reaction to the budget or any follow-up analysis by the press. I'd like to see the dollar figure on the cost savings on eliminating longevity pay - there has to be big savings here for future budgets, which gets at the structural side of the deficit, though how much will that save for next year?

We must remember that our lawmakers have essentially passed six-month budgets for years now, claiming they have balanced the budget, only to have the shortfalls begin to show up less than three months into the new fiscal year. Is this yet another case of that short-term thinking in practice?