Robert David Sullivan 2

Zoo story appalls Washingtonian who's seen it all

The kerfuffle over state funding for the Franklin Park and Stone zoos -- which reached a climax when zookeepers put a metaphorical knife to the throat of whichever animal you find the cutest --- gets a mention on Alan Greenblatt's Governing.com blog today.

Greenblatt calls our zoo story the "one of the most appalling examples" of the "Washington monument strategy" he's ever heard of. What is the "Washington monument strategy"? Greenblatt credits a city councilor from Auburn, California, with popularizing the term and defining it as follows: 

Legend has it that “The Washington Monument Strategy” got its name – and, no doubt, is place in the unofficial Bureaucratic Hall of Fame, which is located in a small unmarked room at IRS headquarters - when the National Park Service would, year after year, and after repeated calls from the President and Congress to find budget savings to their own agency, simply respond that they would have no choice but to close the Washington Monument. You could hear the sighs and gasps from one end of Pennsylvania Avenue to the other. The politicians, upon hearing that one of the most visited and beloved sites in our nation’s capitol would close if they cut the budget of the National Parks Service, crumbled faster than the Chicago Cubs in August. This strategy can be broadly defined as any maneuver by a bureaucrat or politician to wall-off a particular government agency from the searching eyes of cost-conscience reformers.

The gambit has apparently worked for the zoos, as legislators have vowed to restore the funding cut by Gov. Deval Patrick. Is the MBTA trying the same strategy? Commuter boats are, after all, the closest thing the T has to a "cute" service (though I find the "high-speed" trolley that rolls through a cemetery to be the most adorable T offering).

Pew report shows how good data can lead to better state budgets

The Pew Center for the States has released an intriguing issue brief ("Trade-off Time: How Four States Continue to Deliver") recommending "evidence-based decision making" in the state budget process. The report looks at four states for examples of how to measure the performance of government programs with an eye toward creating sensible budgets. According to the authors, these examples show "how tough economic times can be a crucible forging better decision making and a heightened vigilance to ensure every precious tax dollar delivers maximum value for the public."

As the excerpts from the Pew report below indicate, this approach can lead to the elimination of underperforming programs, but also to the strengthening of programs with proven results.

Utah:

...the Governor’s Office of Economic Development recently cut a $300,000 program to help businesses recruit employees when it could not show measurable success. Most of the savings were returned to the general fund, but a portion was used to fund an online recruitment program to encourage former Utah residents to move back to the state by matching their resumes with 120 companies in the state.

Where local aid cuts may fall the heaviest

As the Boston Globe reported yesterday, House Speaker Sal DiMasi is predicting a cut of 5 percent to 10 percent in local aid, or funds from Beacon Hill to city and town governments, next year.

Such a cut would not affect all communities equally. It's possible that the Legislature could tinker with funding formulas so that the cities most dependent on local aid do not suffer the brunt of the cuts (as Blue Mass Group's NoPolitician suggests here), but there's not getting around the fact that certain communities have a lot more to lose. The map below shows how much of each community's revenue came from local aid (as opposed to property taxes and locally imposed fees), and the "danger zone" includes most of the state's Gateway Cities, as well as a cluster of towns in the south central part of the state. Below the map are lists of the communities that are most -- and least -- dependent on local aid.

   

State lottery reports sales slump

This year's revenue from the state lottery is projected to fall 4 percent below last year's record take, State House News Service (subscription required) is reporting today. The $200 million decline is going to make it much more difficult for the Legislature to continue current levels of state aid to cities and towns.

If it's any consolation, I'll bet that a lot of people will find scratch tickets in their Christmas stockings this year, as a replacement for pricey gift certificates and Godiva chocolates. Probably too little, too late...

The Bay State's dangerous dependence on the capital gains tax

Plenty of Massachusetts residents have been hurting because of the stock market meltdown (ask everyone in your office to check their 401(k)s at the same time, and the cries of anguish will be heard on the next block), but the state itself may be in the biggest trouble.

The latest MassINC policy brief, "Capital Gains: Avoiding Harm to the State Budget," details how much state government relies on the capital gains tax (which applies to profits realized by selling stocks, as well as real estate and other capital assets):

Despite the known volatility of capital gains, the Commonwealth’s dependence on them has grown markedly since the beginning of the decade. At the same time, however, our preparedness for managing that volatility has declined. In 1999, Massachusetts was already one of the states most dependent on capital gains revenues, ranking 7th in the nation in the relative importance of capital gains for its state budget. By 2006, the importance of capital gains had grown. Massachusetts is now third most at risk among the 50 states if capital gains income declines. [Only Oregon and Connecticut are higher. - Ed.]

Keep your old car and starve your state's treasury

Another thing for state governments to worry about: people not buying cars. According to the Los Angeles Times:

As the U.S. auto market marches toward its worst year in decades and dealers close in droves, state and local governments across the country are preparing for serious belt-tightening.

Sales of new and used cars, as well as parts and service, are the single largest source of sales tax revenue for almost every state, county and local government, ahead of gasoline sales, restaurants and department stores. (Alaska, Delaware, New Hampshire, Oregon and Montana do not collect sales tax.)

The most recent collection report from the Massachusetts Department of Revenue shows that the state has taken in $178 million in auto sales taxes so far this year (actually, as of Nov. 8). That's a shortfall of $23 million (or 11.4 percent) compared with the same period last year.

Paul Krugman half agrees with the Massachusetts Republican Party

Well, the liberal New York Times columnist agrees with national and state Republicans that, in an ideal world, states would not raise taxes in an economic downturn. But I don't think he'd be on board with the Mass. GOP's current "Stop the Spending" campaign. From Krugman's blog:

...state and local governments operate under fiscal rules that lead to booming spending and tax cuts when the economy is strong and the reverse when the economy is weak. This is bad governance: services are cut precisely when people need them most. It’s also bad macroeconomics: it exacerbates the business cycle.

Right now, we’re seeing a sharp drop in state revenues, which is going to lead to big cutbacks in spending and tax increases at exactly the wrong time.

But never mind about that. Today's Boston Herald takes on the big story of how much it's going to cost to fill up President Obama's new car -- and the parallels to Gov. Patrick's infamous Cadillac.

The last word in Dave Wedge's story goes to Massachusetts GOP spokesman Barney Keller, who seems to be sticking to a belief in fiscal austerity at both the state and federal levels :

If President Obama is going to copy Governor Patrick’s words and his Cadillac, we assume next he’ll copy Governor Patrick’s tax hikes and reckless spending proposals.

Will teachers abandon sinking states?

The Providence Journal runs a Stateline.org-written piece warning that fiscally stressed states may find it hard to retain teachers:

Debbie Johnson got her teaching degree from Michigan State University, but recruiters convinced the 23-year-old to start her career in Georgia, where the weather is warm, the cost of living is lower and the schools offer more resources, such as projectors and interactive wireless pads....

Michigan is 1 of 31 states facing a multimillion-dollar budget gap this year, according to the National Conference of State Legislatures. That makes Michigan’s teachers prime poaching targets of out-of-state recruiters from states such as Texas, Georgia, Nevada and Wyoming, where school-age populations are growing.

The article doesn't say this, but my guess is that the problem is retaining good teachers -- the kind with enough energy and ambition to consider moving to another state for a job with better working conditions.

Massachusetts, and all of New England, are among the states with major budget gaps.

Treasurer Tim makes the New York Times

A Times editorial cites Massachusetts (along with California) as a state that may be in particular jeopardy because of the Wall Street meltdown because we "rely on short-term financing to help pay [our] bills." One of our state leaders has a suggestion:

The state treasurer of Massachusetts, Timothy Cahill, has asked the Federal Reserve Bank of Boston and the United States Treasury to consider lending to the state on the same emergency terms being offered to the financial sector.