Maryland Gov. Martin O’Malley last week proposed a budget that would raise taxes by $311 million.

From the Washington Post:

The Democrat outlined a $15.3 billion general fund budget plan that includes about $311 million in new revenue. About $182 million will come from capping income tax deductions and phasing out exemptions.

[...]

The governor’s plan would cap income tax deductions at 90 percent for incomes above $100,000 and 80 percent for incomes above $200,000.

It also would reduce exemptions from $2,400 to $1,200 per person for singles who make between $100,000 and $125,000 and couples who make between $150,000 and $175,000. Exemptions would be eliminated for singles who make more than $125,000 and couples with incomes above $175,000.

[...]

About $19 million will come from aligning the state’s cigarette tax with other tobacco products. Tax on cigars and smokeless tobacco is 15 percent of wholesale, which was comparable to the 36 cents per pack cigarette tax in 1999. The governor’s proposal would make it 66 percent of wholesale, which would make it comparable to the present $2 per pack cigarette tax.

The proposal also would require online sellers to begin collecting sales tax, which the governor projects would raise about $19 million, but there are questions about enforcement.

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SPRINGFIELD — Illinois, unable to solve its long-running financial problems, was given the lowest credit rating of any state in the country by Moody’s Investors Service on Friday, a move that will increase costs to taxpayers.

A second agency, Standard & Poor’s, left its Illinois rating unchanged but warned of a negative outlook that could lead to a downgrade in the future. A day earlier, Fitch Ratings also left the rating unchanged and declared a stable outlook.

Lower credit ratings generally mean the state winds up paying more interest when it borrows money by selling bonds.

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In 2010, Governor Quinn signed into law a landmark budget reform law called “Budgeting for Results”.  The goal was quite simple, that spending should be tied to measurable goals of the state and that funding should change according to what best achieves those goals.  It was designed to promote transparency and accountability in the many agencies and programs of the state forcing them to measure the effectiveness of their programs with an eye of weeding out those programs that achieve little to nothing for the taxpayer.

That was the stated goal at least.  Now that the first report has been issued by the Budget for Results Commission, we see that it wasn’t about spending reform at all.  It’s about yet another attempt to justify increased mandated and structural spending at a time when Illinois has already passed a 67% income tax hike and is still operating a deficit.

Here is what the commission says about their goal:

Budgeting for Results changes the way the State allocates resources across government agencies. Rather than setting budgets agency by agency based on historic funding levels, BFR allocates resources based on state-wide goals.

…

Measurement is crucial to accountability and transparency. Reliable data and analysis are essential to inform funding decisions and make sure taxpayers see the impact of their tax dollars.

It all sounds good, so far.  In fact, it sounds downright reasonable.  Government has to do things and spending should be calibrated to do those things as efficiently as possible.

So what was the very first recommendation of this august panel to deal with a state that has a chronic and uncontrolled spending problem?

Recommendation 1:

Establish a seventh Result to acknowledge the importance of ensuring that all Illinois residents have access to quality, affordable health care, and to recognize medical assistance distinct from the human service goals. Separating costs will provide greater transparency to spending on Medicaid and spending on other human service activities. The newest Result area recommended is:

All Illinois residents have access to quality affordable health care.

You read that right.

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Despite all the talk of fixing it, California’s budget is still a mess. One of those “fixes” was implemented last summer when the state Legislature increased revenue projections by $4 billion to avoid balancing the budget. Of course, the problem with using such “phantom money” is that it often has a habit of disappearing when you need it most. And it has disappeared just when money for schools is needed. Now deep cuts are on the table. The people lose again.

Naturally the nonpartisan Legislative Analyst’s Office recently reported that the state will receive virtually none of the $4 billion in projected revenue, forcing the state to make some tough decisions in the coming weeks. On the table are major cuts to the education budget, including shortening the school year by a week, not to mention cuts to in-home healthcare programs, and programs for people with developmental disabilities.

Obviously Californian’s budget needs all the help it can get but it looks like it’s business as usual in Sacramento. For instance, an upcoming ballot measure sponsored by a career politician would baffle anyone that truly understands the mess California is in. The so-called California Cancer Research Act coming before voters in June, asks California voters to raise taxes by nearly $1 billion for a whole new perpetual bureaucracy. That is unacceptable to voters. Maddeningly this new program doesn’t even guarantee that the money will be spent in the state! Apparently former state Sen. Pro Tem Don Perata, the career politician pushing the measure, thinks Californians who already paying some of the highest taxes in the nation should reach deeper into their pockets just to potentially send that money across state lines to benefit others. And all the while the budget for the education for those same taxpayer’s kids is about to be slashed.

So, what is the “solution” proposed by Democrats in Sacramento? Raise taxes, of course.

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This week, the 99th annual Wyoming State Fair hosted a swine show, a performance pork contest and even a “pig ‘n mud” wrestling championship. But the biggest hog of all? The fair itself.

The fair has become a pricey pork barrel project that uses Wyoming state tax dollars to subsidize more than three-quarters of the cost of operating the event each year.

In fact, state lawmakers snatched more than $1.4 million from taxpayers to bankroll this year’s fair, which ends its eight-day run on Saturday.

If the attendance figures hold steady this year, every time someone pays the fair’s $3 admission fee, taxpayers will spend $32.29 to subsidize the rest of the cost of the attendees’ visit to the fair.

So why is the Wyoming State Fair such a budgetary burden?

Part of the problem is that Douglas, where the Wyoming State Fair is held, is just this side of East Jesus. The town has a population of only 6,120 and sits 50 miles from Casper and 125 miles from Cheyenne, the only two cities in the state with a population over 50,000.

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From the Associated Press:

The last of the more than 60,000 Confederate veterans who came home to Alabama after the Civil War died generations ago, yet residents are still paying a tax that supported the neediest among them.

Despite fire-and-brimstone opposition to taxes among many in a state that still has “Heart of Dixie” on its license plates, officials never stopped collecting a property tax that once funded the Alabama Confederate Soldiers’ Home, which closed 72 years ago. The tax now pays for Confederate Memorial Park, which sits on the same 102-acre tract where elderly veterans used to stroll.

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Public outrage over lavish government employee compensation and pensions is becoming more heated as new revelations about excesses seem to crop up every week.  The latest: Newport Beach, California, where some lifeguards have compensation packages that exceed $200,000 and where these “civil servants” can retire with lucrative government pensions at age 50.

Newport Beach has two groups of lifeguards. Seasonal tower lifeguards cover Newport’s seven miles of beach during the busy summer months. Part-time seasonal guards make $16 to $22 per hour with no benefits.  They are the young people who man the towers and do the lion’s share of the rescues.  Another group of highly compensated full-time staff work year-round and seldom, if ever, climb into a tower.  According to the City Manager, the typical Daily Deployment Model in the winter for these lifeguards is 10 hours per day for four days each week, mainly spent driving trucks around, painting towers, ordering uniforms and doing basic office work—none are actually manning lifeguard towers.

Like many communities across California, the city of Newport Beach is facing the harsh realities of budgeting with less revenue after housing values and the stock market plummeted.  Now the city’s full-time lifeguard force has finally come under scrutiny.  Next week the city council will decide if cuts are needed to the full-time lifeguard force where last year the top earner received $211,000 in pay and benefits, including a $400 sun protection allowance.  In 2010 all but one of the city’s full-time lifeguard staff had annual compensation packages worth over $120,000.

Not bad pay for a lifeguard – but what makes these jobs most attractive is the generous retirements.

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It sounds like a mythic tale of heroic salvation: A former Republican congressman with a fierce reputation as a cost-cutter comes out of retirement, runs for governor of one of the largest states in the country, and is swept into office by an anti-incumbent, anti-spending wave. Frustrated voters also give the new governor’s party control of both houses in the state’s legislature.

He promises to tackle a historic deficit by slashing spending in his first budget and then…tries to jack up spending by 11 percent during his first two years in office?

If the state of Ohio – “the Heart of it All” according to the state’s license plates – is a political weathervane, then Gov. John Kasich’s first proposed budget represents an ill wind for fiscal responsibility.

Kasich won a narrow victory in November by promising to create a business climate that would grow the state’s shrinking private sector, which has bled nearly 600,000 jobs since 2000. He inherited a historic $8 billion deficit, a consequence of out-of-control spending that spiked outlays by 41 percent in inflation-adjusted dolars since 1990. (That huge bump, incidentally, happened mostly under Republican legislators.)

To call Kasich’s opening budget a massive disappointment to the small-government proponents and Tea Party types who put him in office is an understatement.

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From The Courier Post:

John Willliamson, president of the union representing Camden’s police officers, said he and his members would be at the meeting whether they were invited or not.

“We will be there,” he said. “Camden City needs Camden police officers. As far as firefighters, same thing.

“We know the city, we know the people and we know the terrain.”

In town hall meetings, the Republican governor has chided Camden’s police and fire unions for being unwilling to give up perks such as paid birthdays off. But, Williamson said, his members have never been paid for birthdays off.

Williamson did not say it directly, but he cited an historical figure to imply that the countywide plan is part of a larger plot to dismantle public employee unions in New Jersey.

“‘We must close union offices, confiscate their money and put their leaders in prison. We must reduce workers’ salaries and take away their right to strike,’” he read aloud.

“That was said on May 2, 1933, and the person who said it was Adolf Hitler.”

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California tax payers just took a huge punch in the nose from the same actuaries who provided the cover for state politicians to spike public employee retirement benefits. The latest shocker comes from California State Controller John Chiang who yesterday unveiled a new actuarial report that shows California faces another unfunded debt of $59.9 billion to pay for retiree health and dental benefits over the next 30 years.

Controller Chiang highlighted that the unfunded liability grew during the 2010 fiscal year by $8.1 billion; an amount equal to almost 25% of this year’s entire California kindergarten through high school education budget.

Actuaries have aided and abetted the explosion in under-funding of pension and healthcare liabilities for public employee pension plans over the last ten years. With most public employee pension plans fully funded in 2000, a preposterous actuary study gave assurances that the technology stock market bubble of the 1990s would continue its high returns never burst.

The California Governor and the Legislature used the study, paid for by employees who are eligible for retirement benefits, to justify 40% retroactive increases in lifetime pension payments and enhancements of retiree healthcare. During 2008 and 2009, a bogus California actuary study claiming the retiree healthcare plan was over-funded was used to justify waiving mandatory employee contribution increases to cover accelerating healthcare insurance premium increases.

The bulk of this new increase in retiree costs came as the result of the California Public Employees’ Retirement System (CALPERS) actuaries “discovering” after the fact that employees with their new pensions payments spiked and healthcare enhanced are retiring earlier, retirees are living longer, and healthcare costs are increasing faster than the crony projections by the actuary. The new actuary calculations now estimate the total un-funded California retiree costs are about $340 billion.

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Faced with an $8 billion budget deficit, Ohio Gov. John Kasich (R) is on the verge of signing a bill that would prevent state employees from using collective bargaining to negotiate their health and pension benefits. Wisconsin Gov. Scott Walker (R) has pushed a similar bill, which has drawn national attention, spawned weeks of protests, and sent Democratic lawmakers fleeing the state as a way to stall its passage.

Two other GOP governors facing major budget crises – New Jersey’s Chris Christie and Michigan’s Rick Snyder – have made it clear that they don’t see restricting bargaining rights as the key to more austerity. Texas, North Carolina, and Louisiana face major budget deficits, and in those states public employees don’t have collective bargaining rights.

To what extent is collective bargaining to blame for out-of-control state spending? Is clamping down on the ability of public-employee unions to negotiate an important tactic for closing what may grow to a combined $125 billion gap in state budgets next fiscal year?

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The federal government has identified a new opportunity in its quest to endlessly push dubious spending initiatives supposedly tied to advancing “the greater good.”  According to the New York Post, federal copy-editors are forcing New York state to spend $27.6 million to eradicate the apparently major threat of… all-capital-letter street signs:

Federal copy editors are demanding the city change its 250,900 street signs — such as these for Perry Avenue in The Bronx — from the all-caps style used for more than a century to ones that capitalize only the first letters.

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At $110 per sign, it will also cost the state $27.6 million, city officials said.

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The Highway Administration acknowledged that New York and other states “opposed the change, and suggested that the use of all upper-case letters remain an option,” noting that “while the mixed-case words might be easier to read, the amount of improvement in legibility did not justify the cost.”

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California leaders including Gov. Arnold Schwarzenegger have reportedly agreed a new budget deal, but as the state attracts jeers for its lateness in taking concrete steps to pass a budget, some are booing its leaders for their willingness to sign off on tax hikes when it is being reported that California is owed about $1.4 billion in tax revenue already collected by businesses from consumers, but never remitted to the state.

The LA Times reports:

California is owed nearly $1.4 billion by auto dealers, restaurants and other businesses that collected sales taxes from buyers but didn’t pass the money along to the state — a situation that is aggravating California’s budget crisis.

The tab is up about 25% from a year ago and has almost doubled since 2007, state records show.

That money could make a significant dent in the state’s $19-billion budget gap. Watchdog groups say the state’s failure to collect it is particularly galling because much of the tax money has already been paid by consumers — it just hasn’t been turned over by merchants to the state Board of Equalization.

“All of us want people to pay the tax they legally owe before lawmakers go looking to raise taxes,” said Jean Ross, executive director of the California Budget Project, a Sacramento nonprofit that advocates for lower-income Californians.

Indeed, reports indicate that Republicans in the Golden State have reluctantly signed off on one tax increase as a possible pathway to getting more tax cuts included in any budget.  According to the Sacramento Bee, as of last week, GOP leadership had agreed to a delay in implementation of a net operating loss (“NOL”) deduction originally intended to begin this year until 2012– a move that would supposedly bring in about $1.4 billion.

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The CATO Institute has released its 2010 Fiscal Policy Report Card on America’s Governors, offering praise for some and criticism for many.

At the front of the pack are three Republicans and one Democrat: Gov. Mark Sanford (R-S.C.), Gov. Bobby Jindal (R-La.), Gov. Tim Pawlenty (R-Minn.) and Gov. Joe Manchin (D-W.Va.).  Each of the four earned an “A” rating from CATO, besting their fellow governors by as much as 55 points according to CATO’s scoring mechanism.

Sanford, once considered a top GOP 2012 presidential prospect, led the A-grade recipients.  CATO notes that Sanford has proposed implementing a flat tax in South Carolina, phasing out the state’s corporate tax, and adopting a firm spending cap.  The report card write-up also called Sanford’s budgets “very frugal.”

Jindal, who many Republican insiders expect to consider a run for the presidency in 2016 has “a solid record on both his tax and his spending policies” according to CATO.

Meanwhile, Pawlenty, the subject of much media speculation regarding a possible presidential bid of his own, earned praise from CATO for his record on spending, and holding down general fund expenditures in particular.

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“I predict future happiness for Americans if they can prevent the government from wasting the labors of the people under the pretense of taking care of them.”
Thomas Jefferson

As you probably know, a budget crisis has stymied California legislators for nearly three months. In case you missed it, California is $19 billion (and growing) in the hole and no one seems to have a real solution to the problem. For the Democrats who control the Senate and State Assembly, the way out lies in canceling tax breaks to increase revenue. For the minority Republicans and Governor Schwarzenegger, it means making cuts to state funded programs to decrease spending. Both suggestions are short-sighted and lacking real reform- only temporary measures that will leave us no better off next year.

On the ballot this November in California are two propositions that are worth mentioning in the discussion about the condition of California’s finances: Prop 25 and 26. On the surface, Prop 25 seems like the perfect way to end the budget stalemates that have become so common in California and so devastating to the economy. Scratch through the shiny gloss about increasing government accountability and you will find a bill that is designed to give legislators more power to pass a budget filled with gimmicks and pet projects.

Proponents point to the provision that legislators won’t get paid if a budget doesn’t pass, which hardly matters. Eliminating the super-majority provision means lawmakers will be able to pass any budget they want- even if they know it has no chance of getting past the governor’s office. This proposition does nothing more than put a mask over the real problem facing the budget: we don’t have any money left to spend.

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Paris Hilton may be able to shop without looking at price tags, but the State of Illinois doesn’t have that luxury—particularly when it already has $4.7 billion in unpaid bills. Even so, state legislators receive precious little information on how much the laws they’re approving will save or cost taxpayers.

A summer 2010 survey by the Illinois Policy Institute found that out of 545 bills pending review by the governor, only 3 percent—or 16 bills—had fiscal notes attached. Fiscal notes are like “price tags” for legislation. They are intended to estimate the costs, savings, revenue gain, or revenue loss resulting from the implementation of proposed legislation.

Many of the fiscal notes found in the Institute’s survey were just a couple of sentences long. Believe it or not, we found a fiscal note that was just one word: “minimal.”

The result of this lack of information? Legislators and the public are unable to conduct a proper analysis of the budgetary effects of proposed legislation, and this has real consequences for the state budget. Indeed, the Blagojevich All Kids Expansion passed in 2005 had no fiscal note, although an Auditor General report found that the program’s net cost was $70 million in fiscal year 2009. The statewide sales tax holiday held this August was passed with no fiscal note, even though it is likely to reduce expected tax collections by tens of millions of dollars. Unfortunately, these examples are the norm, not the exceptions.

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In a time when the State of Illinois has reached an all time financial low, it is pushing out state grants to build train/bus stations where they aren’t needed. The state is dangling a $6 million grant in front of my hometown, Quincy, IL to build a new station. Coincidentally, the state owes almost that exact amount of money to our local school system. Building multi-million dollar train stations while school districts, hospitals, and non-profits are threatened to the point of closing their doors is, well, insane.

But, I digress. A ll politics is local and the ‘leaders’ of the City of Quincy would rather take the $6 million grant than see someone else get it. That’s nuts! The high road doesn’t seem to play a role in this conversation. Just over a month ago I went to the Quincy City Council and asked them to return the money to the state and to send a message that this kind of spending in tough economic times was preposterous. I further explained that this was an ethical issue, not a political one.

It seems the concern of our local government is more about the disposition of the “free money”, than the ethical dilemma that such a project represents in dire economic times.

Logical people would see this as an opportunity to let the State of Illinois know that grants (free money) should positively affect the communities it is trying to reach by ending up where the existing needs lie, like paying delinquent payments to our schools, for example.

Carol Knowles, State Comptroller Dan Hyne’s Spokewoman was recently quoted as follows:

“Illinois ended the year in the worst fiscal position in it’s history,”

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Pollsters and pundits alike most often concentrate on the marquee political races.  The Florida Senate race garners national attention because of its intrigue and its national implications.  In California, there is a battle for Governor that will decide the direction of the Golden State.  Just below that surface, however, is a key race that could prove every bit as momentous and which may be key to the future of regaining our limited government heritage – the race for California State Controller.

At first blush, it is a race between a big government, union-supporting incumbent – Democrat John Chiang – and a conservative, limited government reformer, State Senator Tony Strickland.  While there are many races that may fit that description, the Controller’s office is not just another political office.

Keep in mind that despite intervals between Republican and Democrat Presidents, Republican and Democrat Governors, Republican and Democrat Legislatures and Congresses, the size of the federal and state governments has exploded since the 1960’s.  The quaint, 1960s, pre-Great Society, federal budgets of $130 billion have given way to a $4 trillion dollar monolith.  Many state budgets, including California’s have seen similar growth.

That explosive growth, under the watchful eyes of both parties, occurs because more often than not, political discourse is a simple matter of what can government do and how can we fund it.  Far less often do meaningful discussions occur about making government accountable for the money it already has.  If limited government is to make a comeback, the latter must take precedence over the former and (1) today’s environment is the time to do it and (2) the California Controller’s race is the election on which to make that stand.

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It is no secret that Illinois is going broke with over $6 BILLION in unpaid bills to social service providers, Medicaid doctors, mental health providers and schools. It is also no secret that the state has a $13 BILLION budget deficit that the Chicago Democrats who control the entire state failed to address. Next year’s budget deficit will be around $15 – $16 BILLION assuming the economy doesn’t do a double dip recession.

Just last week, Illinois overtook California as the riskiest state to insure against default on bond obligations. You would think cause a sense of urgency among the elected Democrats who control the state. You would be wrong.

Yesterday, we learned from the Associated Press that the Governor was busy doling out 20% raises to his top staff. While the rest of us worry about having jobs, see our hours cut and our pay stagnates, political cronies in the Quinn administration get fat raises.

This would typically be the kind of story the public sector unions would jump on. Not in Illinois because the Democrats and unions like SEIU and AFSCME are part of the same corrupt political class that has driven the state into a ditch. There is also another reason.

On July 1st this year, 40,000 or so AFSCME state employees happily collected a 7% percent “cost of living adjustment”. July 1st next year, they will get another 7%. In short, in 2 years, they will get a 14% raise. Even in good years, 7% is well over inflation. The timing of these raises were also very well coordinated.

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New York Attorney General and Democratic gubernatorial candidate Andrew Cuomo is proving a canny politician the further he progresses in his career.  Thursday, the son of former Gov. Mario Cuomo trashed outgoing Gov. David Paterson’s budget plan, saying he opposes plans to tax soda and hike taxes on cigarettes, and favors cutting spending in order to close the state’s $9 billion budget gap.

According to the Syracuse Post-Standard, Cuomo also indicated Thursday that as Governor, he would bring down state spending by eradicating state agencies and cutting spending on education, health care and Medicare.

New York’s deficit is expected to reach as much as $15 billion next year, with many observers blaming Paterson’s big spending approach for the situation.

Republican candidate for Governor Rick Lazio has been bashing Cuomo for failing to detail how he would close the budget deficit, just as Paterson has been dancing around various proposals to deal with New York’s current budget crisis.

Just days ago, taxpayer groups and convenience store owners breathed a sigh of relief when Paterson backed off his plan to raise cigarettes by $1 per pack, following Republicans in the State Senate signaling that they would vote against any bill including tax increases.

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