Montana's budget 'balance'

Inter Lake editorial

Even during a painful recession, Montanans have the modest comfort of knowing that their state government is relatively sound compared to many other states that have become fiscal basket cases.

A Wall Street Journal report on the topic last week included a map of states that have resorted to layoffs, furloughs and other cost-cutting measures to meet severe deficit demands. Montana, fortunately, is one of the quiet, gray-tinted states that do not have such severe problems.

Indeed, Gov. Brian Schweitzer tells us that Montana is one of just two states, the other being North Dakota, that are not in deficit positions. And Montana has $400 million in the bank, the highest cash reserve position in the state's history.

Meanwhile, nearly a dozen other states are enacting furloughs as well as layoffs in order to meet their budgetary shortfalls. Another nine states are resorting to layoffs. In some cases, the measures have been truly drastic: California has laid off 27,000 teachers, in addition to Friday furloughs for thousands of other state workers; Washington has cut 7,000 government jobs; Michigan has enacted furloughs for 38,000 state employees and Georgia has done the same with 25,000 employees.

It's hard not to notice on the Journal's map that it is mostly "progressive" states run by Democrats that have been the hardest hit. That's largely because of the huge public burdens they have taken on, often at the behest of government unions.

Incredibly, the Service Employees International Union has filed five lawsuits in California to halt furloughs in the interests of the organization's 95,000 members. Union leaders in other states have come to the obvious conclusion that suing is futile, because there is no money.

What's more confounding for the most troubled states is that furloughs are a short-term solution for structural, budgetary imbalances that will persist. And layoffs and furloughs certainly aren't going to help employment statistics or income-tax collections in those states.

Unfortunately, raising taxes and fees to generate revenue for badly warped budgets is a tendency that hasn't been avoided in some states. And that's only going to compound their problems, by driving taxpaying individuals and businesses to friendlier states like Montana.

Indiana Gov. Mitch Daniels warns, in a Journal opinion piece, that all states should anticipate lasting revenue problems even after an economic rebound.

"What we are being hit by isn't a tropical storm that will come and go, with sunshine soon to follow," the Republican governor wrote. "It's much more likely that we're facing a near permanent reduction in state tax revenues that will require us to reduce the size and scope of our state governments."

And turning to the federal government for bailouts will not be the answer.

"Even if Congress goes for a second round of stimulus funding, driven by the political panic of bankrupt Democratic governors, it would only postpone the reckoning," he wrote.

In fairness, Montana's Democratic governor has demanded fiscal accountability and he has not pursued tax increases to balance the budget. As a fortunate result, Montana state government is not in a panic.