Election Politics Squeezing Budget-Strained Governors Like Jindal, Pawlenty

Wednesday, 08 Jul 2009 08:17 AM

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CHICAGO/WASHINGTON -- What happens when the immovable object of a budget crisis meets the irresistible force of an election? Many U.S. states are about to find out.

As states struggle to patch their tattered budgets amid the worst fiscal crisis in decades, governors and state legislators are aware that painful choices could anger voters ahead of what looks to be an unusually competitive election season in 2010.

Unlike the U.S. government, which is projected to have a $1.43 trillion deficit in the coming fiscal year, every state but Vermont is required by law to balance its budget.

The protracted recession has made tax revenue plunge, while demand for government services like unemployment insurance has soared. The U.S. government provided $46 billion in stimulus spending this year alone to help states avoid cuts in education and healthcare and offered interest-free loans to cover jobless benefits, but that was not enough.

With state tax revenue down 6 percent from the last fiscal year and at least $166 billion in deficits looming in 2010, governors who would ordinarily cruise to reelection are locked in tough races. Thirty-seven governorships are up for grabs.

Legislatures, meanwhile, are jockeying to control a redistricting process that can lock in a party's advantage for the next decade. Many of the 7,382 state lawmakers also face what may be angry voters next year, especially if they raise taxes to balance budgets.

On top of that, several Republican governors are weighing whether to vie for the presidency in 2012 and their skills at navigating the budget morass are likely to be scrutinized.

Republican governors with presidential aspirations such as Bobby Jindal of Louisiana, Haley Barbour of Mississippi and Tim Pawlenty of Minnesota, are also likely to weigh budget decisions carefully for a potential national audience.

"I guess the real issue here is how much pain is involved," said Jennifer Duffy of the Cook Political Report, which handicaps elections, "and ... these governors know it."

If there is upheaval in the next election cycle, a substantial shift in party control of state legislatures could have national ramifications.

State lawmakers in most states get to redraw boundaries for U.S. congressional districts after each decennial U.S. census, with the next in 2010. The party in control - Democrats currently control 60 state chambers and Republicans 36 - can redraw the map to favor its candidates vying for seats in the U.S. House of Representatives.

In Texas, Republicans picked up six congressional seats after the legislature redrew the state's map in 2003.

At least 25 states have adopted some combination of higher sales, income and business taxes, 'sin taxes' on alcohol and tobacco, and fees for services such as motor vehicle registration to fight the effect of recession on their finances, says the Center on Budget and Policy Priorities.

Many opted for painful cuts as well, or pushed deficits into the future by issuing debt, turning to one-time revenue measures like selling property or, in the case of California, issuing IOUs to creditors.

"They're saving the patient's life, but they're not restoring the patient's health," said Rutgers University political science professor Alan Rosenthal of the structural deficits likely to remain.

In deficit- and scandal-ridden Illinois, the Democrat-led government sank into near-paralysis, unable to agree on anything - perhaps mindful of their political futures.

Newly anointed Governor Pat Quinn proposed a 50 percent income tax increase but ran into a legislative roadblock from his own political party. Some analysts speculated that powerful House Speaker Michael Madigan might want to embarrass Quinn to pave the way for his own daughter, Attorney General Lisa Madigan, to get elected governor next year.

Republican lawmakers, seeing an opportunity in the chaos among Democrats, played to their own low-tax constituency by refusing to budge on the tax increase, and Democrats feared being branded the party of higher taxes.

Minnesota's Pawlenty dismissed the two-year budget handed him by the Democrat-majority legislature as "unbalanced" and lopped $2.7 billion, or 6 percent, off spending for schools, healthcare, social services and local governments.

"There's no question that national politics would make it harder for him to compromise on some revenue increase," said Dane Smith of Growth & Justice, a Minnesota think tank.

Republican governors might even be forgiven by party activists if they are forced to raise taxes, given the extreme nature of their budget woes, said Republican strategist Ron Kaufman.

"When you've cut everything you can cut, you've reformed and you've cleaned up and you've streamlined and done everything possible and there's still this hole, you're gonna get a bye on the raising taxes issue as long as it's perceived that it was legitimately the last resort," he said.

© Thomson Reuters 2009 All rights reserved

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