Governors Proposing Health Care, Other Spending in 2006
Many state governments are finding themselves "[f]lush with cash" in early 2006, and state lawmakers "aiming to survive the 2006 elections ... are eyeing voter-friendly ways to spend the extra cash" and "make states healthier in the long run," the Wall Street Journal reports.
According to the Journal, many governors cut expenses and raised taxes in the first half of the decade to offset revenue losses following the 2001 recession. Now, the increased revenue resulting from economic recovery is prompting many states to launch "projects geared towards economic development and long-term infrastructure needs," including health care, according to Sujit Canaga Retna, a fiscal analyst with the Council of State Governments.
For example, Arizona Gov. Janet Napolitano (D) has proposed tax credits for businesses that provide health care coverage for employees, and Gov. Arnold Schwarzenegger (R) has proposed a $222 billion bond offering to build "more roads, more hospitals [and] more schools."
According to the Journal, it remains to be seen whether "state legislatures go along with the governors' plans," and financial experts are urging caution on spending in the face of greater fiscal challenges in the years ahead.
Arturo Perez, a fiscal analyst with the National Conference of State Legislatures, said one such challenge is Medicaid, which "has not shown any sign of slowing down or losing its position as the fastest-growing component of state budgets."
Nicholas Jenny, a senior policy analyst at the Nelson A. Rockefeller Institute of Government, also warned that states could "run ... into a ditch" by overreacting to the current cash situation and not planning for future spending needs related to future obligations, including retiree health care costs (Solomon, Wall Street Journal, 1/12).