At The Bottom Of The Lottery Barrel

Here’s a telling indicator of just how bad Illinois’ financial situation is:  the Powerball and Mega Millions lotteries have kicked Illinois out of the games because the state legislature has been unable to agree on a balanced budget.

You read that right.  The Land of Lincoln is such a financial basket case that even the big lotteries won’t have anything to do with the state.  Apparently the lotteries have been talking about pulling the plug on Illinois for years, and they’ve finally decided to do it.

310-million-powerball-ticket-sold-at-mich-gas-station

It’s a significant step on the lotteries’ part, because Illinois reported $99.4 million in Mega Millions sales and $208 million in Powerball sales within the 2016 budget year.  And the loss of the lotteries will be an issue for Illinois from a budget standpoint, too, because 40 percent of the sales revenue goes to fund public schools — and how is the cash-strapped state going to make up the difference?

A spokesman for the Multi-State Lottery Association, which runs the games, said the group “is focused on protecting the integrity of its games and the experience of its players.”

What does that mean, exactly?  It’s kind of weird for the lotteries, which make their money solely by selling tickets to credulous rubes who don’t know or don’t care that the odds of winning are astronomical, to be talking about the “integrity” of their games.  Are they saying they’re afraid that Illinois, in its desperate search for cash, might try to tinker with the games to jury-rig the results, or seize the proceeds if the winner happens to live in Illinois, or decline to hand over the sales revenues?

It’s not entirely clear, but we do know this:  You know you’re really in deep doo-doo when gamblers think you’re too tainted to deal with.   Even the gamblers aren’t willing to gamble on dealing with Illinois.

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California On The Brink

California is teetering on the precipice.  Yesterday Governor Jerry Brown said the state is facing a $16 billion budget deficit.  He proposed some spending cuts to make up the shortfall and asked voters to vote to raise taxes, “temporarily.”

If I were a California voter, I’d be a bit skeptical of Brown’s budget figures.  He forecast a $9.2 billion deficit in January; only four months later that amount has nearly doubled.  His budget also assumes economic growth, a sharp increase in new home construction, and $1.5 billion from Facebook’s initial public offering.  The Governor’s budget also counts on the use of one-time funds, and assumes that he will be able to convince state employee unions to accept a reduced workweek and that he will be able to convince the Democrats in the California state legislature to cut spending on social services.  Notably, Governor Brown also refuses to cut spending on a high-speed rail program.

In short, it’s the by-now-familiar scenario where voters are asked to approve “temporary” increases to the sales tax and income tax on the promise of cuts that never quite materialize.  Brown’s budget contemplates spending $91.4 billion.  Can’t California assign priorities and just cut those programs at the bottom of that priority list?  Rather than relying on phony promises of reduced workweeks and percentage cuts, or overly optimistic growth forecasts, how about making tough decisions and ending programs altogether?  How about firing employees, rather than negotiating to trim their workweek?  How about cutting the dreamy high-speed rail program in the face of budget realities?

The Wall Street Journal has an interesting piece contrasting how New Jersey Governor Chris Christie dealt the deficit he inherited with Brown’s approach.  Christie ended a high-speed rail program as an unaffordable luxury.  Christie vetoed tax increases as economically suicidal.  Christie was able to close New Jersey’s budget deficit without raising taxes.  Why can’t California make similarly tough decisions?

California DREAMing

You have to give the California state government some serious credit for apparently being completely divorced from fiscal realities.

The Golden State is facing a crushing, multi-billion-dollar budget shortfall — so much so that Governor Jerry Brown has ordered state departments to turn in their cell phones and BlackBerrys — and yet the state is getting ready to pass the California DREAM Act, one part of which makes public tuition assistance funds available to “undocumented immigrant students.”  The bill has passed the Assembly, seems certain to pass the Senate, and Governor Brown has said he will sign it.  The availability of tuition assistance comes on top of the fact that California allows the “undocumented immigrant students” to pay tuition at California state colleges at in-state levels, which are significantly lower that the tuition charged to out-of-state students.

I have nothing against immigrants — to borrow the linked editorial’s deft phrase, “illegal or otherwise” — but doesn’t it seem like fiscal nuttiness for a state that is billions of dollars in debt to be extending new benefits to anyone, much less to illegal immigrants?  With this kind of responsible management of the public purse, is it any wonder how California got into its current predicament?

 

Does Limiting Public Employee Collective Bargaining Save Money For State And Local Governments?

In Wisconsin and Ohio, new Republican majorities in state legislatures, and new Republican governors, have modified public employee collective bargaining rights and argued that it is part of an overall effort to bring state and local government budgets back into balance.  Democrats have responded that the budget control argument is a bogus fig leaf and that the real motivation for the Republicans’ actions is union-busting, pure and simple.

It therefore is interesting that in Massachusetts — Massachusetts! — the House of Representatives voted overwhelmingly in favor of a bill to restrict the ability of municipal public employees to collectively bargain about health care benefits.  Moreover, the House effort was led by Democrats, who argued that the changes will help struggling cities and towns.  Indeed, the Democratic Speaker of the House contended that the changes would save cash-strapped municipalities $100 million and allow them to maintain more jobs and provide more services.

The Massachusetts initiative still has to pass the Senate and be signed by the Governor, so it may well not become law.  Still, the fact that Democrats in the Massachusetts House supported such a measure on budget grounds seems like a powerful argument for the proposition that modifying public employee collective bargaining rights is a legitimate way to achieve significant savings in government spending.  If Democrats have accepted that argument in Massachusetts, how can Democrats in Ohio and Wisconsin contend that similar efforts in their states are motivated wholly by partisan politics and mindless anti-union sentiment?

Weirdness In Wisconsin

Wisconsin — home to the Green Bay Packers and their cheesehead fans, different varieties of beer, and countless solid Midwestern burghers of Germanic lineage — has a long and storied tradition of political ferment and dissent.  With the bizarre happenings in Madison over the past month or so, Wisconsin is living up to its rich political and cultural reputation.

Three weeks ago, Wisconsin Senate Democrats fled the state, hoping that last-ditch tactic would prevent a quorum and therefore a vote on a bill to change collective bargaining rules for government employees.  They believed their procedural “Hail Mary” — coupled with constant protests by teacher and public employee unions and union supporters in the Wisconsin state capitol — would exert pressure on Governor Scott Walker and Republicans who supported the bill.  The Republicans held firm, however, and the parties were at an impasse.

Now the Republicans have made the Democrats pay for their high-risk tactic.  Yesterday, while the Democrat Senators remained out-of-state, Republicans stripped the collective bargaining bill of the budgeting provisions that presented the quorum problems and then passed it through the Wisconsin Senate.  Because they chose to absent themselves from the state, no Democrats were present for the final vote or to raise objections to the procedure.  The bill now goes to the state assembly.  In the meantime, protesters flooded, once again, into the Wisconsin state capitol.

In the linked article, the leader of Wisconsin Senate Democrats accuses Republicans of showing “disrespect for the people of Wisconsin” and conspiring to “take government away from the people.”  We’ll have to see whether that spin has any resonance with Wisconsin voters — but it is hard to see how Republicans who stayed on the job in the face of public protest, waited for weeks for petulant Democrats to return to the governmental process, and then enacted legislation in a public forum in the Democrats’ absence, showed more “disrespect for the people of Wisconsin” than the Democrats who tried to take their ball and go home.

Senate Bill 5 Moves On

By a one-vote margin, the Ohio Senate today passed Senate Bill 5, the controversial legislation to modify the collective bargaining rights of public employees.  The vote came as pro-union demonstrators again flooded the Ohio Statehouse and its grounds to try to stir up opposition to the measure.  The union protesters manage to get six Republicans to break ranks with leadership and vote against the bill — but they needed seven defections to kill the bill.  The measure now moves to the Ohio House, where it is expected to pass.  Governor John Kasich supports the bill and would sign it if it makes it to his desk.

I respect the public employees who came to Columbus to exercise their free speech rights and oppose Senate Bill 5, but I believe it is a necessary measure.  Ohio is facing a huge budget deficit, and many Ohio municipalities also are facing budget shortfalls.  A significant part of the state and local governmental budgets are devoted to public employees compensation and benefits.  Senate Bill 5 seems like a reasonable step to deal with those costs.  Public employees could still bargain about wages, hours, and working conditions, but not health care, pension benefits, or sick time.  Public employees also would not be able to strike.  The move should allow Ohio state and local governmental entities to bring public employee health care and pension benefit contributions in line with the prevailing approaches in the private sector, and the savings produced as a result will help to make up the budget shortfalls.

We shouldn’t kid ourselves, however.  Senate Bill 5 is not going to fix Ohio’s budget gap by itself.  Our legislators need to roll up their sleeve and continue to look carefully, and skeptically, at state programs, state departments, and state agencies and decide whether they truly are needed, and if so at what funding level.  What services are critical, and which provide non-essential services that we simply cannot afford any longer?  Public employees in Ohio should not be the only group that bears the brunt of necessary budget cuts.

 

At The Ohio Statehouse Union Rally

A view from the Statehouse steps onto the northwest lawn

Today, after lunch, Richard and I walked over to the Ohio Statehouse to check out the big union rally against Senate Bill 5, the bill that would affect the ability of public employees to engage in collective bargaining rights.  I had been hearing the hubbub outside my office window and was eager to see the turnout.

We got to the Statehouse about 12:45 and entered at the Third Street entrance.  There were some union folks out on Third Street and milling around the entrance.  We saw people wearing public employee union t-shirts, jackets and buttons in the map room and in the Atrium above.  Rows of chairs had been set up in the Atrium, facing each other across a center aisle, and as we walked through a large, leather-lunged woman was leading the crowd in “We want respect” chants.  I would estimate that several hundred people were in the Atrium, and they were in good spirits.

Signs at today's Statehouse rally

We crossed through the Statehouse Rotunda and exited out the Broad Street entrance, which was where the real action was.  A temporary stage had been erected and two singers with guitars were singing union songs.  The crowd covered about two-thirds of the west lawn and sidewalk, with people sitting on the benches and standing on parts of the McKinley memorial.  There were lots of union t-shirts, hats, and some very creative signs criticizing Governor Kasich.  Some of the signs seemed to be generated by outside forces.  For example, we saw several signs referring to Governor Kasich and Wisconsin Governor Walker as “Koch-heads” or “Koch addicts,” and I’m not sure most union workers would focus on the Koch brothers as sign material without some kind of prompting.

The people at the rally were pleasant and friendly, and the whole gathering had an upbeat open-air feel.  The Ohio Highway Patrol had officers at points in the Statehouse, and they were professional and friendly as always.  We later heard an estimate that 8,500 people were at the rally.  I’m not sure it was that large when we were there, but there definitely were thousands of people in attendance.  We did not see any counter-protest.

Regardless of your politics, if you are downtown restauranteur you have to like these protests.  We saw lots of protestors crowding into the Tip Top, Dunkin Donuts, and other restaurants in the core downtown Columbus area.