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As Maine goes....

When President Bush recently visited his summer home in Kennebunkport, Maine, he lamented the devastation an Atlantic storm had weaked on his property and his neighbors.

Had he returned four days later, he could have heard of the terrible damage wrought by the unrelenting recession that has struck the state he knows so well. "I see it everyday," said one Mainer, "in the faces of friends and neighbors, whether it is the fear of a businessman who has never faced unemployment before, the mill worker resigned to the fate suffered by co-workers or the hopelessness of those who continue their fruitless search for a job."

This was not Bush's least-loved Mainer, Senate Majority Leader George Mitchell, speaking to some partisan Democratic crowd. It was Maine's Republican governor and loyal Bush supporter, John R. (Jock) McKernan Jr., explaining on Nov. 6 why he was proposing drastic cutbacks in government services--the layoff of one-fifth of state employees, elimination of the general assistance welfare program and abolition of 35 state agencies, including the Office of Volunteerism, which coordinates Maine's version of Bush's favorite "Thousand Points of Light" program.

All this in a desperate effort to close a budget shortfall that has emerged just since July, when McKernan furloughed all state employees for half the month in order to force through what he then hoped would be a solution.

The only consolation the governor could offer his beleaguered constituents is that similarly painful scenes are being enacted across the county from New England to California.

He is right. The most underreported story of this autumn is that state and local governments are running out of money, as the recession saps their revenues and drives up the mandated costs of social programs.

In California, the shortfall in the current budget looks like $2 billion to $3 billion. Gov. Pete Wilson (R), another Bush ally, has allowed about 30,000 jobs in state agencies to go unfilled and is trying to impose a 5 percent pay cut on those who remain. With welfare rolls up 12 percent, Wilson is talking about imposing a three-year waiting period before immigrants to California can collect any medical or income assistance.

Again, this comes just months after the governor and legislature filled a $14 billion budget gap by a painful combination of tax hikes and service cuts.

Raymond Scheppach, executive director of the National Governors Association, says that almost one-third of the states are reworking budgets "they put to bed only a few months ago." At a recent briefing, Scheppach offered a succinct summary of what this recession has done to state efforts to meet balanced-budget requirements. "In 1989-90," he said, "when growth began to slow, governors tried to maintain services. So they raised taxes about $10 billion. Then, because the economy didn't respond, they had to cut $7 billion from their planned 1991 spending.

"Now, they have gone back and raised another $15 billion--the highest amount ever in a single year. Together, that represents a negative swing of $32 billion in tax hikes and service cuts in a two-year period in total state budgets of $264 billion." No wonder governors and legislatures are in political trouble. And no wonder they turn in anger toward Washington, where incredibly enough, the federal government this year will add more to its debt than all 50 states are raising and spending for all their programs.

This is a crisis in the federal system, where the failure of the national government's policies for sustaining healthy economic growth is crippling the capacity of state and local governments to meet their responsibilities--including the many mandates passed down from Washington.

The future for state and local officials could be worse, because the money they spend is increasingly going to the very people that middle-class taxpayers are loath to support--prisoners and welfare recipients.

The latest state expenditure report, compiled by the National Association of State Budget Officers (NASBO), showed double-digit spending increases in three-fourths of the states for corrections and Medicaid--keeping prisoners out of the way and paying medical bills for the poor.

Those fastest-growing elements of state spending are squeezing out programs the middle class really values. Brian Roherty, executive director of NASBO, pointed out that for all the rhetoric about improving schools, the share of state spending going to elementary and secondary schools has sunk to its lowest level in five years.

And, Roherty said, "higher education costs are being shifted to tuition," which is why concern over the affordability of college is moving up on the list of problems the public says cry out for attention.

What we are witnessing is a double whammy. The failure of national economic policies is forcing states to jettison programs and services--or raise taxes again, which few are willing to do dring a recession. And within the strained budgets, an ever-smaller share can be spent on the programs that most directly benefit the people who pay these taxes.

You don't have to be a rocket scientist to see that this spells nothing but trouble for those struggling to govern at the state and local level
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Title Annotation:recession's impact
Author:Broder, David S.
Publication:Nation's Cities Weekly
Date:Nov 25, 1991
Words:846
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