Governments of the 50 States Going Broke

Some Governors Plan Toned-down Inaugural Affairs

December 30, 2010

Reuters - With the economy showing signs of life but millions of Americans still out of work, some newly elected or re-elected governors are keeping their inaugural parties simple, ranging from blue jeans to barbecue.

In New York, Governor-elect Andrew M. Cuomo plans a private swearing-in on Friday, followed by a small inauguration ceremony on Saturday and a public receiving line at the executive mansion.

In Minnesota, Gov.-elect Mark Dayton will wear blue jeans to his "People's Inaugural Ball" on January 8, which will be open to all Minnesotans for $15 to $30 a ticket.

In Texas, officials will host a "family-friendly" barbecue on the Capital grounds, at $8 a person. And in California, Gov.-elect Jerry Brown plans a free reception at the California State Railroad Museum.

"If you're looking for pomp and pageantry you'll have to look elsewhere," Evan Westrup, a spokesman for Brown, said in an interview.

The inaugurations come as most states continue to face big budget deficits, sluggish revenues, increased demand for services and the end of federal stimulus funding.

Cuomo said in a statement that "this is not a time for the grand and expensive celebrations of the recent past."

Texas Gov. Rick Perry's inaugural information web site noted that the planned January 18 Texas ceremony is "scaled back" from prior years, with a barbecue rather than a parade, and an evening celebration where cocktail attire is "recommended rather than formal."

Not everyone's sparing the pomp -- incoming Florida Gov. Rick Scott, a former health industry executive and venture capitalist, has raised $2 million for his inaugural party set for January 4, according to local media reports.

A ticket to the event goes for $95. Proceeds from funds raised by the black-tie event will go to the Wounded Warrior Project, according to Scott's web site.

State Governments: Immobile, Going Broke and High on Wine

November 14, 2010

Bruno Korschek (loathemygovernment.com) - Many state and local governments are heading towards financial insolvency as a result of their state employee pension and retiree medical liabilities. Consider an article from the October 18, 2010 issue of Businessweek magazine:

- According to a study by the University of Rochester and Northwestern University, there could up to as much as $3 TRILLION in unfunded state workers' retirement liabilities. This comes out to about $26,000 worth of debt burden for every family in America.

- One reason for the problem is that state governments have historically been very generous with the way they funded the retirement plans of their state employees. According to the U.S. Labor Department, state and local governments paid $3.04 per hour toward each state employee's retirement in 2007 compared to $.92 that private companies paid for their employees.

- The median state government pension plan had only 76% of its obligations covered as of this summer.

- Six cities, Boston, Chicago, Philadelphia, Cincinnati, Jacksonville, and St. Paul Minnesota, will run out of pension money by 2020 if nothing changes.

- Other state government programs, such as drug treatment centers and after school activities, are being starved for funds and curtailed in an attempt to meet these huge retirement obligations.

Now consider some individual state situations:

- According to a recent online article by the Washington Examiner, the state government of Maryland has $33 billion in unfunded pension liabilities.

- According to the Stateline organization website, West Virgina has a $7.4 billion shortfall in its state government retiree health care system.

- According to the Houston Chronicle, the Texas state government has a $38.5 billion shortfall in its retiree fund.

- According to an online National Review article, the state of Ohio would have to dedicate 100% of its the next 8.75 years of its revenue stream to fulfill the current state government employee retirement liabilities, excluding any future liabilities. Obviously, if this was theoretically to happen, all other state funding would bet set to zero for almost nine years, i.e. no teachers, no state police, no roadwork, etc.

- Virgina recently closed a $4 billion shortfall in its operating budget partly do to the fact that it did not pay the required $620 million into its state employee retirement fund, raising the possibility of a larger shortfall for the funding down the road.

Why single out those five states? It ties into another recent article that was in the October 25, 2010 issue of Businessweek entitled: "Pouring Government Money Into Merlot and Chardonnay." Apparently, despite possibly being $3 TRILLION in the hole just for state government employee pension benefits, all 50 state governments have some kind of program of giving state taxpayer money to in state wineries. The article points out the following examples:

- The state of Maryland, despite a $33 billion shortfall, has paid out over $80,000 to six in-state wineries to both plant more vines and expand production capacity. Knob Hall Winery received $8,000 from the state to plant 4,000 vines. The winery has lost money every year since it opened in 2006 and will be unprofitable again this year. Thus, the state of Maryland is not even funding a profitable private endeavor.

- The state of Texas, despite a $38.5 billion shortfall, allocates $2.3 million a year of taxpayer money for wine research, marketing, and grants, nine times what it allocated in 2005. Thus, as the economy got worse, more taxpayer money went into the in-state wine business.

- The state of Ohio, despite swimming in red ink caused by its out of control retiree liabilities, spent more than $1.1 million in subsidizing its state wineries last year, up 38% from the previous year.

- The state of Virginia, despite a multi-billion dollar budget shortfall, dedicates $1.3 million of its budget to support its state wineries.

- Although the West Virginia state government winery support dollars are not in the article, consider the financial status of the Forks of Cheat Winery in West Virginia. The winery is 22 years old and has yet to turn a profit. Wonder how many West Virginia taxpayer dollars are going to support this long time unprofitable operation?

- According to a spokesperson from the American Sommelier Association, it usually takes over two decades, if then, for a new winery to become profitable.

As a result of their outsized retiree pension liabilities, the states are rapidly facing bankruptcy, find themselves cutting other vital human services in order to pay for these retiree programs, but somehow think it is a good idea to subsidize unprofitable private businesses. How many drug treatment centers could be kept open in Texas if it diverted that $2.3 million winery subsidy? How many more teachers could Ohio keep on the payroll if they diverted the $1.3 million they spend?

And it is not just the states. According to the article, the Federal government, that government level with over $13 TRILLION worth of debt, will spend $500,000 of Federal taxpayer money just to help Virgina wineries, it will spend $40,000 to encourage alternative vine growing strategies in Idaho, and will spend $9,000 to improve highway access to wineries in Colorado.

Obviously, stopping all winery subsidies will not cure the states' pension program problems and will not balance the Federal budget. However, these subsides are no more than examples of corporate welfare and should not be a responsibility or priority of any government entity, there are just too many problems, both financial and human, that need to be addressed with limited funds. How many other industries in each state and throughout the country receive taxpayer dollars? Add up all of those subsidies and you are probably talking about some serious dollars.

If a winery cannot be profitable on its own, it is not the state's duty to keep it alive. In doing so, other vital financial needs go unmet. This is the concept that New York Times columnist David Brooks talked about several weeks ago, our "immobile government." Government in America today has become so burdened down with bad priorities, poorly structured, poorly negotiated, and poorly financed retirement plans for state workers and corporate subsidies for failing businesses such as wineries, just to name one, that vital services, services that could positively and materially affect regular individual citizens, go wanting.

Drug treatment centers, school funding, infrastructure improvements, etc. cannot be done because the political class has done such a poor job of immobilizing government at every level with bad and burdensome priorities.

The question of whether state governments and the Federal government will be able to fix their financial status and shake off the bondage of immobile government is the greatest challenge facing the country today. We can only hope that the politicians can find the courage, respect, and knowledge to fix these dire problems. We owe it future generations of Americans to present them with a workable, financially strong and mobile government structure and we can pay no higher respect to the sacrifices our veterans have made than to fix the country they so bravely defended so many times and restore the freedom that immobile government steals away.

Budget Woes Force State Parks to Delay Maintenance

December 30, 2011

AP – At state parks across the nation, this is the toll of the deepening budget crisis and years of financial neglect: crumbling roads, faltering roofs, deteriorating restrooms.

Electrical and sewer systems are beginning to give out, too, as are scores of park buildings, some of them built by the Civilian Conservation Corps during the Great Depression. In a few places, aging bridges have been detoured and tunnels blocked off because of falling debris.

The tough economy has made money scarcer for administrators at some of the country's most treasured public spaces who have been forced to postpone maintenance and construction projects, creating a huge backlog of unfinished work that would cost billions of dollars to complete.

Park managers say they try to funnel money to the most urgent needs. Others have received help from private groups or volunteers to tackle work they cannot afford to finish on their own.

"We do what we can," said Denny Bopp, a supervisor for the Missouri district that includes the Lake of the Ozarks State Park, more than 150 miles southwest of St. Louis.

The park's centerpiece is a huge man-made reservoir that attracted more than a million fishermen, campers, boaters and vacationers in 2010.

Many states had backlogs long before the economy started to decline. But the lack of revenue has allowed more sites to decay, and no one can say how long the work will have to wait. At the Lake of the Ozarks, the list of needed repairs includes a historic home with a severely sagging roof and holes in the porch, and a restroom facility partially covered in moss.

The Associated Press sought information from park administrators across the nation and consulted researchers and published reports. An AP analysis of the data showed that the backlog of projects has ballooned to more than $7 billion and continues to grow.

Park officials say federal stimulus efforts have offered little help for the 6,500-plus state parks, recreation areas and historic sites in the U.S. And they contend a federal conservation fund to support recreation areas has skewed toward federal facilities.

Site managers and park advocates worry that putting off maintenance work too long risks making repair projects more expensive, just as a house in need of new shingles will eventually require an entire roof if the first signs of trouble are ignored.

Robin Dropkin, executive director of the advocacy group Parks & Trails New York, said recreation areas can only be allowed to decay so far before visitors stop coming or facilities must be closed for health and safety reasons.

"Who wants to go into a restroom that is falling apart?" Dropkin said. "Who wants to drink water that may be questionable?"

More than a dozen states estimate that their backlogs are at least $100 million. Massachusetts and New York's are at least $1 billion. Hawaii officials called park conditions "deplorable" in a December report asking for $50 million per year for five years to tackle a $240 million backlog that covers parks, trails and harbors.

In Missouri, the list of repairs surpasses $200 million. Michigan initially reported a backlog of more than $300 million, although that may improve a little. Renovations could get under way in 2011 at an historic beach house at Ludington State Park, which has been waiting at least five years to begin the work.

"Everyone seems to have sort of similar issues: Nobody has a lot of money, and everyone has a lot of projects to do," said Will Harris, director of the Maine Bureau of Parks and Lands.

Earlier this year, the National Trust for Historic Preservation declared state parks and historic sites to be among the nation's most endangered historic places. The group cited construction backlogs, park closures and other budget cuts.

Another risk is that if parks attract fewer visitors, they also bring in less money for the state and for nearby communities. The National Association of State Parks Directors estimates that the parks generate $20 billion in economic activity annually.

Ken Caplinger, director of West Virginia's parks, said park supervisors are doing their best to avoid cutting the activities and services that are most important to visitors.

"With ingenuity and a lot of elbow grease and hard, above-and-beyond-the-call-of-duty work, you can disguise for a long time a significant lack of funding," he said. "But eventually, you have to pay the piper. Eventually it does catch up to you."

Some visitors have started to notice.

Sean George, a camper and hiker who frequently visits Missouri's parks, said the bathrooms and other facilities can be used, but they clearly need work.

Many of the sites, looked like they "could use a little TLC," said George, 38, of Columbia, Mo.

For the limited money that is available, repair projects must compete against new developments. And the pizazz of opening a new park is often more exciting than fixing an underground pipe.

"It's always more fun, more interesting and more sexy to build something new than to repair something old," said Courtland Nelson, director of parks and trails for the Minnesota Department of Natural Resources. "So you have situations where a new state trail, a new water feature or a new state park gets added, and some of the dollars that go into that new thing would have gone into repairing the old thing."

A few states have managed to keep up with important projects.

North Dakota, which escaped the worst of the recession, spent about $900,000 upgrading old but useable electrical and water systems at two parks. Officials expect to put even more money into park projects because revenue from visitors is exceeding the cost of running the facilities.

"In a budget crunch, we would get told, 'You have to live with that,'" said Jesse Hanson, who manages the planning and natural resource division for North Dakota Department of Parks and Recreation. "But we have been able to convince legislators this is a good time to get that up to contemporary needs."

Some parks have gotten help from the public to keep up.

In Ohio, private groups have raised money, and volunteers have helped maintain bike, hiking and horse trails.

Last summer, Missouri used federal work-force investment money to hire more than 1,000 young adults to work in the parks. Designed primarily to get young people outdoors, the program also helped clean up trails, repair roofs and paint buildings.

But plenty of work remains to be done.

"Somewhere along the line, we got behind, and it just kept getting bigger and bigger," Missouri Parks Director Bill Bryan said. "And we have to make a dent in it now."