Budget wonks will remember 2011 as the year state governments acquiesced to the Great Recession’s fiscal realities.

 

Three years after the arrival of hard times, governors, legislators and revenucrats ran out of options. They continued to expect a rapid economic turnaround, and as always, hoped for more money from the D.C. cash machine. But assumptions and pipe dreams were all that was left. Reserve funds? Drained. The Obama administration’s “stimulus” largesse had slowed to a trickle. Further bonding for unemployment payments and operating expenses was risky.

 

So actual cuts, not just stingier-than-desired increases in expenditures, took hold this year. The rollbacks weren’t what they need to be, especially given the huge unfunded liabilities most states face. But a marquee stat suggests that the restraint is real: The National Governors Association and National Association of State Budget Officers report that 29 states “have lower general fund spending” in the current fiscal year (which ends June 30, 2012) than “the pre-recession levels of fiscal 2008.”

 

Some of the moves toward right-sizing were on the thin side:

 

• California’s solons gave up their subsidized vehicles, saving $285 per month, per pol. Taxpayers seem cool with yanking the rides. “Not very many people have their employers give them cars,” budget watchdog Robert Stern told the Sacramento Bee, “and these are, after all, our representatives and they really shouldn’t be getting perks that very few people get.”

 

• In April, the Texas Department of Criminal Justice eliminated weekend lunches for the cons under its care. The prison system also replaced carton milk with powdered milk and ditched hamburger and hot-dog buns for slices of bread. One legislator fails to feel sympathy for complainers. “If they don’t like the menu,” quipped State Sen. John Whitmire, “don’t come there in the first place.”

 

• Republicans in New York’s Senate downsized their chamber. Jimmy Vielkind, a reporter with the Albany Times Union, enumerated the changes: “The payroll had 1,132 people as of [October], down from a high of 1,503 in July 2010. Regional offices in Buffalo, Rochester, Syracuse, Long Island and Albany are all closed, and six departments have been consolidated into three.”

 

• New Mexico capped the annual value of the tax credits it showers on film and television productions at $50 million. Michigan limited its giveaways to $25 million. Washington let its program expire. (It’s not the end to states such as Connecticut’s sleazy, absurdly generous giveaways to a highly profitable industry, but it’s a start.)

 

Yet fiscal conservatives probed major cost drivers in 2011, too, and frequently scored wins. Wisconsin soaked up the bulk of the legacy media’s coverage of the compensation disparity between government and private-sector employees, but less visibly, other states stepped forward. Summer saw the passage of higher worker contributions for retirement and health care in New Jersey. As a “public” radio reporter put it, Rhode Island tackled its pension-driven budget dilemma “by hiking the retirement age, freezing cost-of-living adjustments, and moving nearly half of current state workers’ contributions into a 401(k)-style plan.”

 

There was also good news on welfare. In a November analysis, the far-left Center on Budget & Policy Priorities wailed, “California cut [Temporary Assistance to Needy Families] benefits by eight percent, New Mexico and Washington by 15 percent and South Carolina by 20 percent, in nominal terms. (The cuts in inflation-adjusted dollars were still larger.)” In July, Arizona stopped Medicaid coverage for adults without children. “Michigan can no longer afford to provide lifetime assistance,” a social-welfare bureaucrat told the New York Times, explaining that thousands of her state’s cash-handout recipients had been on the rolls for over a decade.

 

State colleges and universities have long been sacrosanct — rewarded with endless revenue, and free from oversight and accountability. That may be changing. In October, Florida’s chief executive penned a blunt letter that asked inconvenient questions of the Sunshine State’s university presidents. “Many…graduates are unable to find jobs in their field of study,” wrote Gov. Rick Scott, “and many employers are concerned that…graduates are not equipped with the appropriate writing skills, critical thinking skills and technical expertise needed to succeed.” Earlier in the year, Gov Jay Nixon proposed that subsidies to Missouri’s higher-ed-industrial complex be linked to metrics such as completion rates and graduates’ performance on professional-certification tests.

 

Fixing state government — getting it to stop doing the things it shouldn’t, and start doing the things it should, affordably — is sure to be a lengthy conflict. Optimists can credibly argue that the battle has finally begun.

 Looking toward 2012, it is likely that the divisive discussion brought on by a national presidential election campaign will make its way into Connecticut. We don’t look forward to it.

The glimpse into that future that President Obama provided us in his December 6 address should be alert for all in the business community regardless of what political party they support.

This page does not often wade into the national dialogue just as we don’t help our readers choose their political leaders. What concerns us, however, is that inevitably the national election will effect the dialogue and outcomes in Connecticut in a very unfortunate way.

Connecticut, frankly, is a state populated largely by “haves.” Times are tough in Connecticut now, as elsewhere, and the appeal of “us vs. them” and an entitlement mentality are taking hold — often among people who should know better based on their relative economic status.

The so called  “Occupy” is a simple example, but more importantly we have seen it in the rhetoric of those who claim to be in the mainstream of Connecticut politics as well. A march on the home of General Electric CEO Jeff Immelt (ironically a supporter of the President) drew no rebukes from Connecticut’s elected officials.

We are not encouraged by the President seeking reelection by harkening back to the heated rhetoric of a 100-plus-year-old political movement. We’re equally unimpressed by those in the “tea party” who insist that the last great ideas in this country came from our founders two-plus centuries ago.

Our problems in Connecticut are certainly not greed. Significant private giving is a way of life in this state, especially here in greater New Haven.

What we do suffer from us is an inability to craft solutions based on our existing resources and with an outlook for the beginning of the 21st century.

We need an energy policy that is realistic and readily achievable.

We need a true commitment to education reform across Connecticut not just for a select few communities.

We need a commitment to a diverse economy that goes beyond lip service to small business.

We need dialogue from our elected representatives that does not seek to help workers but forgets that employment starts with employers and their ability to generate profits.

New Haven has indeed made progress in the past ten years. That that progress is fragile is evidenced by a six-fold increase in homicides over five years. It’s a problem that won’t be solved by heated rhetoric or street demonstrations but, as New Haven Mayor John DeStefano points out in this month’s ON THE RECORD interview, by a renewed commitment to policing and community engagement.

As some Republican and Democratic leaders point out in our cover story, Connecticut needs to honestly face its financial challenges. It won’t be possible to do that in an environment of blaming successful people for what they have earned.

We urge our readers to insist that Connecticut’s political leaders of both parties don’t try to drag us into a destructive analysis of our problems to help their party win an election.