When it comes to being on an airplane, we would all agree that we’d rather have a soft landing as opposed to a quick descent. But what about when it comes to state budget cuts? Should we cushion the blow with a soft landing by borrowing billions or should we make quick cuts and get the pain out of the way sooner rather than later? The overwhelming thought coming from our elected officials is that they think we need a soft landing. In meeting after meeting yesterday, many believe aggressive cuts would hurt too much.
Since Lt. Governor Ravitch announced his plan last week, there has been quite a bit of discussion about what he proposed. In case you missed it, here are some of the highlights:
- Moving the state budget date to June 1 instead of April 1
- Create a fiscal control board to oversee state finances
- Establish a state spending cap
Not bad options. But the one kicker in the plan that is simply wrong is that the state would be allowed to bond $2B a year for the next 3 years. Yes, that’s right. Borrow money to cover a deficit that is created because we spend too much. The rationale? The state can’t cut $9B out the budget now but could over time if allowed to borrow the $2B, thus creating the soft landing.
Obviously we disagree. Allowing a government body that has proven time after time that they cannot control spending to borrow money is simply the wrong approach. Instead, we believe that the state should do more cuts now, getting them over with quickly so that we can adjust and move on. And not for nothing, but the state is already very close to its constitutional debt cap. And contained within that debt is nearly $11B leftover from the last time the state was allowed to borrow to cover deficits. Another historical reference point that supports our theory that the legislative body won’t stop borrowing.
So that leads me to my question. What would you prefer? A soft landing that would add to the state debt or a couple of years of aggressive cuts that hurts now but gets us further down the road to recovery?