What Should Be and What Will
John Kostrzewa makes a number of excellent points in a recent column:
[Two economists’] forecast is important because there is an argument making the rounds in City Halls and at the State House that the recovery of the economy will eventually pull city and state finances back from the brink of disaster. The thinking is that an improving economy will bring in more tax collections to pay for the services and employee benefits that elected officials have approved over the last few decades.
It’s not going to happen.
The financial hole dug by city and state leaders is so deep and the improvement in the Rhode Island economy is so shallow that the crisis can’t be solved by waiting it out.
Rhode Island’s economic difficulty has been building for decades, at least. Perhaps because world events and prosperity led voters to take their eyes off the budgetary ball, or perhaps because compounding policies finally reached the cliff, over the years since the turn of the millennium, the government excess has become impossible to ignore. Indeed, Rhode Island’s annual deficit problem began in the midst of the housing bubble; its taxpayer flight began earlier; and there’s no reason to believe that either trend will reverse just because the rest of the American economy brings a rising tide.
The other day, Ted Nesi noted that, at its current rate of job growth, Rhode Island won’t return to its employment peak until the year 2045. As I’ve been warning, the recovery of employment and economic opportunity elsewhere could accelerate RI’s relative deterioration.
Kostrzewa does make one point, though, about which I’m skeptical:
That makes 2011 the bellwether year when public officials, pushed by taxpayers, have to prioritize which services they want to provide and how to restructure government, whether through consolidation or regionalization, to pay for them.
The note in the margin of my newspaper reads: “Wanna bet?” Kostrzewa has described what has to happen, but nobody should expect that it will. We have the wrong government policies in place (taxes, mandates, regulations). For the most part, we have the wrong people in public office (the new governor worst among them). And increasingly, we have the wrong electorate (heavily constituted of people dependent on government, in one way or another, and insulated by government policies). What we’re more likely to get are policies that, like last year’s tax “reform,” have the sound of positive change but do not resolve structural problems and potentially make them worse.
Yes, we all have to ring this bell as frequently and loudly as possible, but we should brace ourselves for even rougher roads ahead.
“there is an argument making the rounds in City Halls and at the State House that the recovery of the economy will eventually pull city and state finances back from the brink of disaster. ”
I missed this one! That would have been enough to make me pi** my pants laughing.
This is the kind of alleged “thinking” engaged in by rich communists like Jerzyk and Sgouros.
Rough roads indeed are ahead. Petulant children are not a pretty sight when they finish eating the cookies and are told there are no more.