Budget Cuts Still Reality for the States; Governors Sound Off on the Issue

The advice Puerto Rico Gov. Luis Fortuño gave to policymakers about how to deal with the lingering budget crisis states are facing is similar to what one might say to a toddler trying to remove a bandage from a skinned knee.

“… Do it quickly, swiftly and go as far as you need to go in year one,” he said during Sunday’s lunch session, “Preview 2011: What’s Ahead for State Government.” “Don’t stretch this pain. Just do it as quickly as you can.”

Fortuño is no stranger to fiscal pain. When he took office in 2008, he was facing a 44 percent budget gap and the state was dangerously close to having its bonds being downgraded to junk status. Through swift budget cuts across all agencies, salary reductions for even the governor and cabinet members and cuts in contracts, Puerto Rico now has a state debt that is less than 11 percent of its budget and policymakers are now looking at tax cuts.

“The people are expecting leadership,” Fortuño said. “They may not like what you’re going to do. ’09 was a very tough year for all of us, but we made the right decisions and now we’re beginning to reap the benefits of those decisions.”

Montana Gov. Brian Schweitzer said people are expecting state governments to do what they have been doing—cut back.

“You can find 5 percent” to cut, Schweitzer said. “Businesses and families have. … Whether Democrat, Republican or unicorn, they expect all of us to deliver a more efficient government. They expect you to improve the status quo and they trust us more than Congress.”

Rhode Island Gov. Donald Carcieri said there are many difficult issues policymakers must examine as they struggle with huge budget deficits. Even the untouchable parts of the budget—education, Medicaid and prisons—need to be looked at. Legislators also need to examine the state pension system—like Rhode Island has done in the past year—and retiree health care.

“You have no choice,” Carcieri said. “Why do I say you have no choice? When you look at the citizens in most of your states, most of them don’t enjoy the same level of pay, same level of pension and same level of health care. It’s all about an equity issue. You’ve got to bring all your benefits in line with the private sector.”

Former Wyoming Gov. Jim Geringer said legislators should look at the budget process in a new light. Policy should drive the budget, he said.

“Understand the budget first of all by priority, and second by how you would direct policy through the budget,” Geringer said. “That’s your greatest opportunity to direct policy. The legislature controls the purse strings. … How you spend is much more important than how much you spend.”