Wednesday, August 11, 2010

One more nail in the coffin of federalism

That supposed stimulus bill that the Democrats passed yesterday to help fund state workers carries strings telling the states how they must use the money.
Specifically, the bill stipulates that federal funds must supplement, not replace, state spending on education. Also, in each state, next year's spending on elementary and secondary education as a percentage of total state revenues must be equal to or greater than the previous year's level.

Governor Haley Barbour of Mississippi did the math and figured out his state will be worse off. Mr. Barbour says the bill will force his state "to rewrite its current year [fiscal 2011] budget. Preliminary estimates of the Mississippi Department of Finance and Administration show that we will now have to spend between $50-100 million of state funds—funds that must be taken away from public safety, human services, mental health and other state priorities and given to education—in order for an additional $98 million of federal funds to be granted to education. There is no justification for the federal government hijacking state budgets, but that is exactly what Congress has done."

For Texas, and only Texas, this funding rule will be in place through 2013. This is a form of punishment because the Beltway crowd believes the Lone Star State didn't spend enough of its 2009 stimulus money. Apparently Texas politicians have been clinging to the quaint notion that the government should try to live within its means.

Texans also seem to have an old-fashioned appreciation for the rule of law. On Friday, 22 GOP Members of the state's Congressional delegation sent a letter to House Speaker Nancy Pelosi. "This provision would have Texas violate her own State Constitution," they wrote. "The Texas Legislature has sole authority to determine State appropriations. Moreover, one Legislature cannot bind a future Legislature. Requiring the State to assure that a future Texas Legislature would commit to spend funds in accordance with these provisions would violate the Texas Constitution."
So states that might want to actually figure out budgets that fit within their means will be prevented from doing so by the terms of this stimulus money. They can't make cuts. And Texas will serve as the salutary lesson of what happens if states try to shift other money away from education once they take the stimulus aid.

Isn't it convenient that this money will go to union members so that they can pay the union dues that the unions will then have to spend on the fall elections? It's a cute pas de deux between the Democrats and the unions. And the result is that unions feel secure in rejecting any cuts in their benefits.
The unions themselves could have prevented some layoffs had they been willing to adjust their rich benefits. In Milwaukee, for example, nearly all of the 500 teacher layoffs announced earlier this year could have been avoided if the unions had agreed to change health plans that cost $23,000 per teacher per year for family coverage. They could have accepted a still-rich $17,000 plan. The unions chose the layoffs, betting (correctly) that Democrats in Washington would come to their rescue.
The unions and Democrats just keep doing the same ol' jig that has gotten state pension plans into so much of a hole. At some point the dancing must stop and the piper will have to be paid. The Democrats just keep hoping they can postpone the reality that they've been ignoring.