Budget Cuts and Governors’ Political Fortunes

Wednesday, New Jersey Governor Chris Christie spoke to a packed house at the American Enterprise Institute in Washington D.C. His remarks were entitled “It’s Time To Do Big Things,” and he addressed the need for states and Washington to make painful decisions in order to balance government budgets. Governor Christie has gained national attention from his tough stance towards public unions (specifically teachers’ unions) in righting his state’s budget.

Thursday, fifteen school systems in Wisconsin are closed due to a massive “sick-out,” where teachers have called in sick in order to continue protests at the state capitol over newly elected Governor Scott Walker’s bill to reduce the benefit packages of public sector employees. The bill asks teachers to contribute towards their retirement pensions and health care premiums in order to combat a pending $3.6 billion state deficit. Similar protests occurred when California raised tuition fees at state universities.

Most states, unlike the federal government, are constitutionally required to balance their budgets every year. A year ago, the Pew Center on the States reported that states are facing a trillion dollar gap between their pension assets and liabilities. The public understands the shape of their state economies; CBS reports 74 percent say their state’s budget is in bad shape and Pew finds that 81 percent agree their state is facing budget problems.

In the face of these looming budget gaps, Governors are being forced to make tough decisions about where precious state funds go. Illinois Governor Pat Quinn raised taxes by 67 percent. New governors in Wisconsin, Ohio, and Florida have rejected billions in federal money for high speed rail because they fear that project overages and maintenance costs will burden their state treasuries. Indiana Governor Mitch Daniels leased a state highway to a private company for the next 75 years, for a onetime fee of just under $4 billion.

CBS finds that 68 percent of the public think that focusing on both cutting major programs and increasing taxes is the best way to handle the budget. When asked about budget correcting actions, “decreasing the pension plans of government employees” received the most support with 47 percent favoring the action. Nothing garners a majority, so any action a governor could take is seemingly be unpopular. Cutting K-12 school funding is the least popular action; only 18 percent approve of doing it to balance the budget.

Yet, governors are being rewarded for their decisive action. As Governor Christie mentioned in his speech, Governor Cuomo enjoys an approval rating in the 70s. While not as popular, Quinnipiac finds that Governor Christie has a 52 percent approval rating after his first year of budget cuts. Governor Daniels, who brought Indiana from a $600 million deficit to a $300 million surplus in his first year, had a 42 percent approval rating when he proposed program cuts, modest tax increases, and privatization. But he went on to win reelection by 18 points in 2008 in a state that also voted for Obama (Daniels is a Republican), and he now enjoys an approval rating near 70 percent amongst Hoosiers.

Americans know that state budgets are in bad shape, and they will reward strong, decisive leadership. Despite the fact that most budget saving actions garner support from less than a third of citizens, governors who take action to fix budgets are viewed favorably. New governors will face loud criticism over cuts, especially from those affected the most. But if New York, New Jersey, and Indiana are any guide, Governors who take the lead in reducing budgets are rewarded in the court of public opinion.