- Jan 20, 2001
- 10,737
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Surprisingly long for Yahoo
(select excerpts)
The National Governors Association says states are suffering their worst economic crisis since World War II. But for many states, the analysis shows, the fault is largely their own.
Utah, Georgia and Delaware are the best financial stewards, according to the USA TODAY analysis of the states' financial performance. The key to their success: restraint. During the economic boom of the late 1990s, these states limited both spending growth and tax cuts. After the economy weakened in early 2001, they acted swiftly and decisively to keep their finances sound.
California, the worst-performing state in the analysis, did the opposite. It approved huge spending increases and tax cuts during the boom. When the economy soured, the state began borrowing money and using accounting gimmicks to avoid its day of reckoning. Today, it continues to spend $1 billion a month more than it takes in.
* The healthiest states avoided big tax cuts during the economic boom. The conservatively managed states of Utah, Georgia and Delaware have cut taxes and fees at half the national average since 1997, USA TODAY found. But tax cuts had mixed effects elsewhere. Hawaii cut taxes, but it also cut spending and is in better shape than it was five years ago. New York, in contrast, slashed tax rates at the same time that it was sharply increasing spending. It is now borrowing and raising taxes.
* Divided government promotes fiscal restraint. States spend more when the same party controls both the legislature and the governor's mansion. States increased spending 6.8% annually from 1997 through 2002 when one party controlled state government, but only 5.9% when control was divided, USA TODAY found. That might seem a small difference, but because of compounding, the effect on a budget can total hundreds of millions of dollars after a few years.
On another front, tax cuts were only half as big when government was divided.
Polls show that voters want to cut state spending in theory, but not in practice. In a USA TODAY/CNN/Gallup Poll, 79% said they preferred spending cuts to tax increases to balance state budgets.
Those who favored spending cuts were asked whether they were willing to cut education funding: 77% said no. On health care funding, 78% said no. Education and health care make up about two-thirds of state spending, so balancing budgets by cutting spending is nearly impossible if those programs are off limits.
(select excerpts)
The National Governors Association says states are suffering their worst economic crisis since World War II. But for many states, the analysis shows, the fault is largely their own.
Utah, Georgia and Delaware are the best financial stewards, according to the USA TODAY analysis of the states' financial performance. The key to their success: restraint. During the economic boom of the late 1990s, these states limited both spending growth and tax cuts. After the economy weakened in early 2001, they acted swiftly and decisively to keep their finances sound.
California, the worst-performing state in the analysis, did the opposite. It approved huge spending increases and tax cuts during the boom. When the economy soured, the state began borrowing money and using accounting gimmicks to avoid its day of reckoning. Today, it continues to spend $1 billion a month more than it takes in.
* The healthiest states avoided big tax cuts during the economic boom. The conservatively managed states of Utah, Georgia and Delaware have cut taxes and fees at half the national average since 1997, USA TODAY found. But tax cuts had mixed effects elsewhere. Hawaii cut taxes, but it also cut spending and is in better shape than it was five years ago. New York, in contrast, slashed tax rates at the same time that it was sharply increasing spending. It is now borrowing and raising taxes.
* Divided government promotes fiscal restraint. States spend more when the same party controls both the legislature and the governor's mansion. States increased spending 6.8% annually from 1997 through 2002 when one party controlled state government, but only 5.9% when control was divided, USA TODAY found. That might seem a small difference, but because of compounding, the effect on a budget can total hundreds of millions of dollars after a few years.
On another front, tax cuts were only half as big when government was divided.
Polls show that voters want to cut state spending in theory, but not in practice. In a USA TODAY/CNN/Gallup Poll, 79% said they preferred spending cuts to tax increases to balance state budgets.
Those who favored spending cuts were asked whether they were willing to cut education funding: 77% said no. On health care funding, 78% said no. Education and health care make up about two-thirds of state spending, so balancing budgets by cutting spending is nearly impossible if those programs are off limits.