OUR SPENDTHRIFT STATES DON'T NEED A BAILOUT

Our governors and state legislators need to learn to use fat years to prepare for lean ones.

This time last year, many governors and state legislators were imploring Congress to let them spend more money; now, they are imploring Washington to bail them out. But this is not the first time states have been caught in this trap. Why? Because many fail to address their deep, structural budget problems during the good times, and fail to deal with huge and growing employee pension and benefits liabilities:

• The average public sector worker earns 46 percent more in total compensation than a private sector worker, largely because government employers.
• States have collectively racked up $731 billion in unfunded liabilities for pensions and other retirement benefits but have only put aside $11 billion.
• California state and local governments are paying some $12.8 billion a year to finance public employee pensions, up from $4.8 billion in 1999.

States argue that they need federal aid to avoid cutting essential programs* that hurt their most vulnerable citizens. Unfortunately, more federal aid all but guarantees they won't use the current crisis as an opportunity to put their fiscal houses in order -- setting the stage for worse problems to come.

[*as usual, any talk of lower taxes (or, in California, not raising them as much as the Democrats want) results not in consideration of trimming back pension contributions but in threats of cutting essential services. And we keep sending them back...]

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