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Pay no attention to the people behind the curtain

Friday, May 15, 2009

Here it is ...

by folkbum

You had to know this was coming:
Gov. Jim Doyle said Friday that falling tax collections will force him to propose new cuts of up to 5% in state spending for public schools and aid to local governments. [. . .]

In February, before tax collections in this fiscal year fell by $925 million, the governor had proposed a small increase in aid to schools for next year.

Now, with estimates of tax collections being reduced every week, Doyle said, "I think you're looking at almost every expenditure in the state - cuts of 5% or more. We would really like to find a way to keep (the cut) at 5%, or under 5% for schools."
Local governments have two options for dealing with this kind of situation: Cut services or raise taxes. (Despite the insistence of those living on Planet TeaParty, there is not much hay to be made trying to offer the same level of services more cheaply.)

Neither option is all that appealing. Local governments are going to have more difficult choices to make. In the case of school districts, it will almost certainly be to tax more rather than ask our teachers and students to get by on less. Local units of government will probably cut services, meaning fewer potholed filled, less access to the kind of help that people are likely to need in a recession.

For months, people Smarter Than Me, like Paul Krugman, have been arguing that the federal stimulus package was too small, and this is evidence thereof. Normally, I like to think of myself as a bit of a deficit hawk, even arguing, for example, that there's not so much a Social Security problem as there is a deficit problem at the federal level. In this recession, though, I've found myself turning more and more into what I might think if as a practical Keynesian. When the economy tanks, the areas in which schools pick up slack get strained (more students need free lunch, for example, or after-school activities while their parents are at their second or third jobs). Same thing for state resources like unemployment--someone has to process the forms and answer the phones, not to mention the cost of benefits themselves). In short, Krugman's right, and today's news (not to mention yesterday's news) confirms it.

Nothing about the present crisis is pleasant to consider. Severe reductions in services don't make it more pleasant going forward.

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