The latest winners of the most preposterous statement contest must be those incumbent state legislators who “turned a $6.1 billion deficit into a $1.2 billion surplus.
Like many preposterous statements, there’s a bit of truth tucked into this gooey mess, but mostly it’s a high choleric lie.
First, consider the $6.1 billion shortfall. In November 2010, state budget forecasters estimated that if things stayed the same by June 30, 2013 the state would have a $6.1 billion shortfall.
Of course nothing ever stays the same, and as the noted economist John Kenneth Galbraith once said, “The only function of economic forecasting is to make astrology look respectful.”
So three months later, the same forecasters estimated the budget would be under water by a ‘mere’ $5 billion. According to the forecasters, most of the difference came from Federal changes to tax law and reduced Medicaid expenses. And since the state legislature was not even in session during this time, there was nothing they did, or did not do that affected that $1.1 billion change.
Then, the acrimonious 2011 legislative session began (ending in the state shutdown). After some negotiation, they whittled the number down to a $4 billion shortfall (the nugget of truth). So again, how did the legislature turn this shortfall into a surplus?
First, they told the school districts, “you know the IOU we gave you last year, and promised to make it up this year? Well not only are we reneging on that promise, we are going add another $780 million IOU to the pile.” Poof, say goodbye to $2.6 billion of the shortfall. Don’t try that strategy at home, the banks will repo your car, and foreclose on your house.
That left the last $1.4 billion. How did they mend that fence? By borrowing the money from the tobacco settlement, which has to be repaid (with interest) over the next 20 years.
So on to the $1.2 billion so-called surplus. In my world, surplus means ‘extra,’ more than I need. Well this ‘surplus’ is long gone. By law those dollars are committed to replenish the state’s cash flow and reserve accounts ( wrung dry during last year’s shenanigans) and making a token down payment ($200 million) on the $2.6 billion owed to the school districts.
So, what the incumbent legislators really should say is “turned a $5 billion deficit into a break-even proposition by reneging on our promise to fund education and borrowing the rest.” Unfortunately, that slogan might not fit on a lawn sign.