TALLAHASSEE, Fla. – California's governor wants to maintain temporary tax increases to keep $9 billion a year flowing to the state treasury. Low-tax Texas is considering tapping its rainy day account to soften the effects of deep spending cuts. New York's governor pushed through budget cuts while keeping a campaign pledge to avoid tax increases.
And residents of Illinois and Florida are getting a very different take on taxes: Illinois passed a massive increase, while Florida proposes giving its taxpayers a big break.
The five states are the nation's most populous but are taking very different approaches to solving their respective budget deficits, illustrating that the priorities of the majority party play as much a role in budgeting decisions as a state's fiscal health. If those states are a guide, there is no single model for how to close a deficit.
California, Texas, New York, Florida and Illinois collectively represent about one-third of all state spending nationwide, according to a report released in December by the National Association of State Budget Officers. Each is taking its own approach to dealing with the common problem of having less money to pay for programs already in place, as the Great Recession takes a deep bite out of government tax revenue.
It's too early to tell which approach will prove most successful.
In Florida, Republican Gov. Rick Scott's proposal to cut government spending to address the budget shortfall, and then cut more to give corporations and property owners a tax break, is an experiment that no other large state is trying. The idea is that short term pain for those who rely on state services can become a stimulus that will lead to long-term financial health.
In all, he's proposing $1.7 billion in tax cuts.
"There's more than one way to skin a cat, and there's certainly more than one way to reduce a budget deficit," said Sean Snaith, director of the University of Central Florida's Institute for Economic Competitiveness. "It's reflective of different approaches to governing just in general. Down here, it's really a fairly strong anti-government, small-government mentality. It's certainly prevalent and you don't find that, in the big cities at least, in California and Illinois."
Florida's budget gap is about $3.7 billion, about 5 percent of its current $70. 5 billion budget. Scott wants to make cuts to fill the hole and then begin gradually phasing out the state's corporate income tax, which, at 5.5 percent, brings in about $2 billion in revenue for Florida.
He also wants to cut property taxes and a variety of fees and lesser taxes. He's sought advice from Donna Arduin, who has previously helped prepare budgets for Republican governors in New York, California and Michigan, as well as former Florida Gov. Jeb Bush.
Arduin said she believes Florida will be better off if the Legislature goes along with Scott and thinks long-term. She said there is a correlation between the size of state government and the strength of the private-sector economy.
"The best way to improve your budget is to improve your economy," said Arduin, president of Arduin, Laffer & Moore Econometrics. "When government is big, the economy does not do well. When government is smaller, the economy does do well."
Illinois Gov. Pat Quinn is taking the opposite approach. His state is facing a $15 billion deficit, yet his $35.4 billion budget proposal calls for an overall $1.7 billion increase in spending.
Quinn pushed through an income tax increase, and Democrats want to borrow $8.7 billion to pay off bills that have piled up. Republicans have proposed cutting up to $6.7 billion in spending, an idea Quinn rejects.
"We are not going to jeopardize our economic recovery for their proposal. We have a dynamic economy in Illinois that's cut unemployment for 12 straight months — frankly, no thanks to them — and I believe that investing in education, health care, human services, public safety, that's part of an economy that recovers," said Quinn, a Democrat.
He uses the same argument for increasing government spending that Scott and other Republican governors use for cutting it: It's the best way to jumpstart the state economy and generate the additional tax revenue that will lead to healthy budgets in the future.
In New York, the approach of Democratic Gov. Andrew Cuomo is more in line with that of his Republican peers around the country.
The Legislature recently passed a budget on time — a rarity in a state infamous for political dysfunction — that largely adhered to Cuomo's vision. The budget cut spending to address a $10 billion deficit, including historic reductions to schools, public colleges, social service programs and health care, and did not raise taxes.
Democratic lawmakers had wanted to extend a temporary tax increase on New Yorkers earning more than $200,000 a year.
"This is about recognizing the new economic reality that government is responsible for management, just like everyone else," Cuomo said. "The days where government can just throw money at the problem and raise more taxes ... those days are over."
Texas lawmakers also refuse to consider tax increases as the state faces its first budget deficit in many years.
Lawmakers and Gov. Rick Perry are debating how to address a $27 billion shortfall in the two-year budget that will run from Sept. 1 to Aug. 31, 2013. That's about 30 percent of the $88 billion in state money that makes up the current two-year plan.
One house of the Texas Legislature recently approved budget bills that tap $3.2 billion from the state's Rainy Day Fund while cutting $8 billion from public schools and slashing Medicaid by more than $4 billion. Funding for highways, prisons, state parks and dozens of other programs also was cut or eliminated entirely.
The Texas Senate wants to restore some of those cuts, primarily to K-12 schools, but the funding source is uncertain. One possibility is using more of the state's $9.4 billion rainy day fund, although how much to use and when to use it has yet to be resolved.
"Families sent a pretty clear message with their November votes. They want government to be even leaner and more efficient, and they want us to balance the budget without raising taxes on families and employers," Perry said. "Balancing our budget without raising taxes will certainly set a nice example for the rest of the nation."
Republican lawmakers from California — the minority in that state — certainly think so.
A group of them are traveling to Texas on a fact-finding mission to see how that state lures businesses, including some from California. They argue that the best way to restore California to fiscal health is by cutting corporate taxes — which they succeeded in doing two years ago — and streamlining business regulations.
California Gov. Jerry Brown wants to ask voters to renew temporary increases in the sales, income and vehicle taxes, but he needs two-thirds of the Legislature to support putting the question on the ballot. Republicans are resisting. Most have signed no-tax pledges, making compromise with majority Democrats difficult.
Brown and the Democrats already have addressed more than $11 billion of California's $26.6 billion deficit, mostly through spending cuts, but are warning that an all-cuts budget will do irreversible damage to core government functions, including the K-12 and higher education systems.
The Democratic governor has taken his appeal directly to voters via YouTube, emphasizing the effects of more spending cuts schools, fire and police services, health care and more.
"I don't want to do that, and I don't think it should be done to you without your voice," Brown says in the video.
Christopher Wills in Springfield, Ill; Michael Gormley in Albany, N.Y.; Judy Lin in Sacramento, Calif.; and Chris Tomlinson in Austin, Texas, contributed to this report.
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