New York and California are arguably in the worst budgetary condition of all the states. Yesterday, the governors of each gave very different State of the State Addresses on how they intend to deal with the coming months. Governor Schwarzenegger reiterated his request that Washington, D.C. send back what is owed to California. In his words, “the federal government is part of our budget problem.”
In his analysis, this means more federal money will help fix California’s budget. However, more federal money to California will accomplish exactly what it has accomplished to date. It will delay real reform of California’s fiscal tailspin (e.g. CalPERS).
By contrast, Governor Paterson of New York gave a somber assessment of New York’s “winter of reckoning,” placing blame squarely on the state legislature for excessive spending and deal making with unions, feeding an “addiction to spending, power, and approval,” that has left the state in economic catastrophe.
New York’s Governor got the diagnosis right. As The New York Times notes, last year’s stimulus led the state to increase spending by 9 percent, even as the economy faltered and revenues plummeted.
Both governors want to stimulate “green job” creation. Unfortunately, it’s a policy more that’s more well-intentioned than effective. Governor Schwarzenegger talks of privatizing prisons. Governor Paterson wants ethics reform in fundraising. The primary difference is while New York’s governor has admitted to a spending problem, California’s is still making excuses to continue.