Political Memo: States’ Money Woes Show No Favorites

The governors who gathered here over the weekend for the summer meeting of the National Governors Association have all been scathed by the unpopular things they have had to do to keep their budgets in balance. For the veterans, it was just the latest in a series of tough years. For the rookies — 29 new governors took office this year — it was their first taste of state budget battle.

“It’s funny, here I am, I’m six months into it and I don’t think of myself as a new governor anymore,” said Gov. Dannel P. Malloy of Connecticut, a Democrat who took office this year and closed a gaping deficit with a blend of tax increases, service cuts and union concessions.

Since the unions have failed to ratify the agreement he made with their leaders, he now faces the prospect of having to lay off more than 5,000 state workers. “It’s been that kind of six months,” he said.

Now, more than a dozen governors of both parties said in interviews here, states are going to have to adjust to what some are calling the “new normal”: the strong likelihood that they will be asked to make do with less federal aid. It is not just the end of the stimulus money, which has helped keep many states afloat but is now mostly gone. Governors are closely watching from their statehouses as the debate in Washington increasingly centers on what further cuts to make.

“It’s like falling off a cliff,” said Gov. Christine Gregoire of Washington, a Democrat. “And we’re going to be at the bottom of that cliff for a long time in our relationship with the federal government. And whatever they’re going to decide in the way of cuts, I hope they understand the implications to the states and what it’s going to mean on the ground out here.”

Gov. Terry E. Branstad of Iowa, a Republican, said, “I think we’ve got to recognize that the federal government is never going to be able to deliver what they promised.”

The uncertainty over federal cuts — both Democrats and Republicans in Washington have called for cutting $100 billion from Medicaid over the next decade — is clouding the outlook for states even as their tax collections are slowly climbing back toward their pre-recession levels.

There was a partisan divide here over how to react to the expected new austerity. Democrats, for the most part, called for the federal government to balance cuts with taxes, so services could be preserved. Republicans, on the other hand, opposed higher taxes, and said that they would be able to manage with less federal money as long as the federal government also gave them the flexibility to spend less money on required programs.

Some Republicans — including Gov. Gary R. Herbert of Utah, who surprised his guest governors when a stunt double posing as him did a ski jump — say they support amending the Constitution to require the federal government to balance its budget. That would almost certainly result in a steep decline in aid to states.

But Mr. Herbert said that he still worried about the potential impact of some federal cuts.

“In order to get our fiscal house in order, the federal government is going to have to do what they need to do,” he said. “And if they’re going to have us administer federal programs, it helps if they don’t balance their budget on our backs. That would not be fair, either. But everyone needs to tighten their belts.”

Many governors rattled off the cuts they had reluctantly made, or the taxes they had reluctantly raised, to keep their states going after a downturn that included the deepest and longest declines in state tax collections on record. Ms. Gregoire lamented that she had put a big hole into her safety net by ending a program that sent checks to unemployable adults. “These are folks who, without anything, will probably go homeless on the streets,” she said.

Cutting access to Medicaid was a tough decision, said Gov. Jan Brewer of Arizona, a Republican. The state had expanded access in flusher times, but now, after selling off state office buildings, winning passage of a temporary sales tax increase to help finance education and making cuts elsewhere, she said that there were few options open to her.

“That was, of course, very, very difficult, but we had no other choice but to address that issue,” Ms. Brewer said of the Medicaid cuts, which are being challenged in court. “We were kind of caught in a situation where, although people felt it was a good thing that we were able to do that, we weren’t financially able to continue that. So we had to go in and remove it.”

For Gov. Martin O’Malley of Maryland, a Democrat, one of the hardest cuts he made was closing a mental health center on the state’s Eastern Shore that he said had helped many vulnerable people.

“Not easy,” he said. “I still remember one of the letters I was given by a guy who went through that center. It said we all face a fundamental choice in life. We can either be bitter about what we’ve lost, or focused on what we have.”

Article source: http://feeds.nytimes.com/click.phdo?i=921e16f18d576b0a4ab685a3f364f8cd