TIME: Almanac 1993/TIME Almanac 1993.iso/time/030491/0304106.000

Text File | 1992-08-30 | 9.7 KB | 194 lines

                                                                                NATION, Page 50

A New Pragmatism


Many first-term Governors find they have no choice but to attack
fiscal crises with bold -- and politically risky -- strokes

By PRISCILLA PAINTON -- Reported by Robert Ajemian/Boston,
Bonnie Angelo/New York and Joseph J. Kane/Atlanta

    Every Governor in America last year could have recited the
Jim Florio Rule of political survival: never mount an honest
attack against a state deficit.

    The New Jersey Governor, who combined service cuts with the
highest tax hike in the state's history, was all but tarred and
feathered for his efforts. But now, with at least 29 states
facing potential deficits, Florio's approach is beginning to
seem almost prescient. In the past six weeks, Governors from
California to Connecticut have been doing the unthinkable: they
are trying to turn their fiscal disasters into political
opportunities. First-term Governors, with all the bravura of
newcomers, are the most ready to break the rules.

    In Connecticut, where the idea of a state income tax has
been practically banned from political discourse, incoming
Governor Lowell Weicker Jr. has boldly called for one. Elected
15 months ago, Governor Douglas Wilder of Virginia has
continued to defy assumptions about the social priorities of
black Democrats by proposing that the state eliminate, among
other things, the Department for Children, the Council on the
Status of Women and the Council on Indians. In California,
where health and highways are obsessions, Governor Pete Wilson,
a Republican, is taxing granola bars and raising the cost of
registering cars.

    Some Governors have pledged never to raise taxes and are
instead cutting back on government spending. Others have
resorted to tax increases while vowing not to abandon
government's role of social engineer. But what many of these
executives have in common is that they are wrapping their plans
in the mantle of moral courage. "Let us make history as well
as headlines by reinventing the way state government functions
in this cradle of democratic capitalism," said William F. Weld,
the newly elected Republican Governor of Massachusetts, in his
inaugural address. From the ornate chamber of Connecticut's
General Assembly, Weicker, in office scarcely a month, told
legislators: "Neither you nor I signed on to muck around for
two to four years in the mistakes of the past."

    The impetus for all this is that the nation's freshman
Governors, like many of those returning to office after last
fall's elections, are confronted with three problems all at
once. The recession has cut deeply into revenues from state
corporate and income taxes, while also leading to more cautious
consumer spending that reduces the take from sales taxes. At
the same time, the states are shouldering more of the burden
of federal programs and facing stiff increases in the costs of
Medicaid (18.4% in fiscal 1990 alone), bridge and highway
maintenance, prison construction and new schoolrooms.

    The sheer size of California puts its deficit, estimated to
be as high as $10 billion, in a class by itself. To close the
gap, Wilson has proposed cutting the state's grants to poor
women and children 9%, eliminating programs for the homeless
and freezing all cost-of-living increases for state employees.
So far, he has not breached the state's decade-long resistance
to new income or property taxes. In an effort to raise $1.7
billion, however, he has asked for higher vehicle-license fees,
a 20% increase in state university and college tuition, and an
extension of the 6% sales tax to previously exempt items like
pretzels and magazines. "Between the budget and the drought,
the situation is so bad in California, we may all become
statesmen," says the Republican leader in the state senate, Ken
Maddy.

    In Massachusetts, Weld has defined statesmanship by
presiding over the most sweeping reduction ever in the state
government. With only four months left to close an $850 million
budget gap for fiscal 1991, and facing a projected $1.8 billion
shortfall next year, the Governor has calmly proposed putting
everything from zoos to skating rinks into private hands,
firing 6,200 of 63,000 state employees, forcing the state
government's entire remaining work force to take 10 days of
unpaid leave before July, shutting down 18 of 37 motor-vehicle
offices, closing mental-health hospitals, abolishing the board
of regents and making the elderly count their homes as assets
in qualifying for Medicaid nursing-home care.

    Like several of his colleagues around the nation, Weld is
bringing ideological zeal to his rescue plan. As a follower of
supply-side economics, he shuns any new taxes, will not go to
Wall Street to do more borrowing and wants to give businesses
some tax relief. "I can't imagine a sharper break with the
past," Weld said last week. Except for the chancellor of the
board of regents, who resigned in protest, most of Weld's
constituents so far seem to believe they deserve Weld's bitter
medicine now that Massachusetts has an unemployment rate of
8.6% and has swallowed three huge tax increases since 1988.

    If Weld is brazen, then Weicker and Tennessee's Ned
McWherter, who is also trying to institute a state income tax,
may be courting political folly. The only time a state income
tax was enacted in Connecticut, in 1971, it provoked such an
outcry that it was repealed within six weeks. Tennesseans
dislike the tax so much that the state courts once declared it
unconstitutional. Both Governors hope to soften the blow of the
new levies by lowering sales taxes. McWherter, a Democrat
re-elected last fall, has also made the plan more palatable by
promising to channel the new revenue toward education in a state
that currently ranks near the bottom in per-pupil expenditure.


    Weicker, who bolted from the Republican Party to run as an
independent last year, is making no excuses. When he took over
in January, he found the state running a $2.4 billion deficit,
out of a $7.4 billion budget. "All the gimmicks, the bonding,
the shenanigans -- there's none left, they've been used up,"
he says. Along with instituting the income tax, Weicker wants
to lay off state employees and limit Medicaid nursing-home
allowances. Like Weld, he has sworn not to seek credit from the
financial markets, and is determined to jump-start the state
economy by giving $300 million in tax breaks to corporations.
In the meantime, Weicker sounds almost pleased about the
outcry his budget has provoked. "That's a good sign. It shows
that it is fair because everybody is getting hurt," he says.

    While many of these fiscal disciplinarians are driven by
necessity, some are also hoping their efforts will be rewarded
with national attention. Under Virginia law, Wilder cannot run
for re-election, so his budget slashing and firm rejection of
any new taxes in dealing with the state's $2 billion deficit
are also an attempt to define himself as a lean and mean
Democrat before he runs for his party's presidential nomination
in 1992. "He wants the national party to notice that his lips
don't move," says Larry Sabato, a political scientist at the
University of Virginia.

    But as George Bush learned last year, there are political
hazards in fiscal risk taking. A poll conducted last month by
Mason-Dixon Opinion Research, for example, showed that Wilder's
popularity is at 44%, a record low for postwar Virginia
Governors. So for all their budgetary courage, many of the
nation's brave new Governors may learn that the Jim Florio Rule
cannot be ignored with impunity.


____________________________________________________________
A NEW PRAGMATISM


    CALIFORNIA

    Governor PETE WILSON has attacked a $7 billion to $10
billion deficit by cutting almost 10% out of the state's aid to
poor mothers. The newly elected Republican also wants to
impose cuts of 4% on most services and freeze all
cost-of-living increases for state employees. So far, he has
refused to introduce new income or property tax increases, and
he has offered to spend more on programs for disadvantaged
families and drug abusers that emphasize prevention.

    MASSACHUSETTS

    Faced with a crushing deficit, WILLIAM F. WELD has proposed
firing 6,200 of the state's 63,000 employees, halving the
monthly allowance of nursing-home residents, closing
mental-health hospitals, scrapping his predecessor's plan of
universal health insurance, abolishing the state's board of
regents and shutting down 18 of 37 auto-registration offices.

    CONNECTICUT

    To close the yawning gap in his state's budget, LOWELL
WEICKER JR., a political maverick who bolted from the Republican
Party to run as an independent last year, has done the
unthinkable: he has proposed a state income tax. He also wants
to cut back the benefits of state workers and lay off 1,100 of
them, limit Medicaid nursing-home allowances and postpone
cost-of-living increases for some welfare recipients. But to
revive the state's beleaguered economy, Weicker also is
offering to reduce the corporate tax rate from 13.8% -- the
nation's highest -- to 11.5%.

    VIRGINIA

    DOUGLAS WILDER is trying to define himself as a fiscally
conservative Democrat. He has sworn not to raise taxes, and is
cutting deep into the state budget to eliminate its $2 billion
deficit. He plans to lay off 600 state workers, reduce agency
spending 12% to 20%, and force employees to take at least six
unpaid days off. Wilder also wants to postpone at least 100
building projects, cut aid to state colleges and universities,
raise tuition and shorten the hours of tourism centers.