Tuesday, June 29, 2010

What Things Can't We Afford Anymore?

The economic crisis and the desperate fiscal situation in a lot of states is really making us consider what things government should do, and what things it simply can’t afford to do anymore. There may be some things we might ordinarily like to do that states will have to stop doing in this climate. Here are some examples:

1. The approach to the drug war

Many states have already loosened medical marijuana laws to the point where it is relatively easy for citizens to get a prescription. California is thinking about going even further and legalizing and taxing marijuana in a referendum this fall. The tax is projected to bring in about one billion dollars a year. I don’t expect any drug including marijuana to be legalized any time soon on a wide scale. But I do expect to see states increasing the use of alternative punishments for non-violent drug offenders such as rehabilitation and community service so they can avoid spending thousands of dollars a year to imprison inmates. In normal times, people might want to really be tough on low level dealers and users in part because they legitimately fear the influence of such people on their children. With states contemplating raising taxes to plug huge shortfalls though, people might also decide however that they don’t want to pay more money for stiff drug sentences now.

2. Commitment to higher education

Many states like Michigan, California, Texas, Virginia, and North Carolina have built their flagship campuses into prestigious universities. Often these schools have been able to offer quality financial aid packages to students. Some cuts to financial aid have already happened. And I think further cuts will be coming. College students lack the political muscle of senior citizens and the sympathetic image of kindergarteners. This means that it might be easier to cut programs benefitting them than it would be to cut programs for kids or grandparents. Besides, college kids aren’t really kids, right? They’re adults. They can take on more loans if need be. A lot of citizens may wonder why their taxes should go up to help pay the tuition of 20-year old partying it up at night in Chapel Hill when they are struggling. Over time, this could lead to a “new normal” where college students can expect less help in attending college.

3. State bureaucracies

One of the biggest problems states are facing is pension obligations to police, firefighters, and teachers. Legally, states may not be able to get out of pension obligations. But citizens who are seeing their own 401ks suffer will be leery of funding pensions for public sector employees. State legislators may rework pensions to be more market oriented, and decrease public sector salaries. Now is as good a political climate as any to change those things.

In short, I think the economy might force some long term changes in state budgets. Do you think the changes are positive or negative?

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