New Governors Will Have Hands Full Reforming Education, Spending

by Kyle Olson

With most of the media focusing their 2010 election coverage on whether or not Republicans will reclaim one or both houses of Congress, the 37 states that are about to elect (or re-elect) a governor get lost in the shuffle.

If Republicans do as well as projected, most observers expect gridlock to descend upon Washington D.C.  That means the real action and drama will be at the state level, where newly-elected governors will have to deal with high unemployment, shrinking budgets and public employee unions that will fight as if very existence is at stake (which it is).

Here’s a brief overview of what’s at stake for the governors of three states.

Michigan: The Wolverine State’s manufacturing-based economy has been ravaged by free trade agreements and obstinate unions.  Since 2000, Michigan has lost over 900,000 jobs.  The current unemployment rate is 13 percent, and unlikely to drop below double digits any time soon.

The state’s public employee pension funds are awash in red ink.  The Mackinac Center reports that the state has underfunded pension plans by almost $12 billion.  The state’s next governor will almost surely be Michigan businessman Rick Snyder who ran under the slogan, “One tough nerd.”  Come November 3, Mr. Snyder will face one tough job.

Ohio: Like its neighbor to the north, the Buckeye State is barely hanging on.  The unemployment rate is 10 percent, which only exacerbates the state’s “structural budget shortfall” that could reach $8 billion by 2012.  On top of that, the State Teachers Retirement System (STRS) has $40 billion in unfunded liabilities.

On the bright side, Ohio was recently awarded $400 million in federal funds from the Obama administration’s “Race to the Top” initiative. The bad news: after four years, that money will dry up.  Since Ohio spends “49 percent more on district-level bureaucracy than the national average,” there will have to be some big changes to the public education system.

That last statistic comes from John Kasich’s campaign website.  Given that he’s likely to be the next governor, Ohio citizens can take comfort from the fact that at least he’s aware of the problem.  Nevertheless, Mr. Kasich can expect to go a full 12 rounds with the teachers unions. Ohioans better hope it’s his hand that’s raised in victory at the end of that heavyweight matchup.

New York: If New Yorkers really want to see great drama, they should forget about Broadway and focus their attention on what happens in Albany, where state number crunchers will try to restore fiscal sanity after a $9 billion deficit for this year, and a projected $8.2 billion deficits for next year.

Here’s how the New York Times summed up the Empire State’s outlook in the paper’s September 1, 2010 edition:

“New York’s residents will not have their benefits cut, [Republican candidate for state comptroller Harry J.] Wilson says, citing the constitutional guarantee.  But over time, residents will see more cuts in public services and less money for infrastructure maintenance as public dollars are diverted to fill the hole in the pension fund….The state’s plan to borrow billions more from the pension fund to get through this year’s fiscal squeeze, meanwhile, will drive the fund deeper into the hole.”

Yes, there are bleak times ahead for many states.  On Tuesday night, after the cheering crowds leave and the TV camera lights go out, newly-elected governors might break out in a cold sweat when they realize what they’re up against.

But if they’re smart, they’ll pick up the phone Wednesday morning and call New Jersey Governor Chris Christie to find out how it’s done.


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Posted Nov 1st 2010 at 2:53 pm in Economics, Education, Midterm Elections | 38 Comments