Don’t be Impressed when a Governor tells you how often he’s “Balanced the Budget”

Whenever you hear about how some Governor “balanced the budget eight times as Governor,” you should not be impressed. Why? Because, with a few exceptions, they all have to balance their state budgets. It’s required by their state constitutions.

Right now we still have three Governor’s in the Presidential race – Chris Christie from New Jersey, John Kasich from Ohio, and Jeb Bush from Florida – and so far I’ve only heard Christie touting his record of “balancing the budget.” Again, that doesn’t separate him from any other Governor in the nation, with the exception of Vermont, Wyoming, North Dakota, and arguably Alaska.

So first some budgeting basics: states differentiate between operating budgets and capital budgets.

  • The operating budget is for the normal activities of the state, especially salaries, fringe benefit costs, and other direct expenses.
  • Capital budgets are for long-term projects, like building new highways, mass transit, or college campuses; these are funded through long-term bonds.

Most states have in their Constitutions that the operating budget must be balanced every year. That also means that they cannot go and issue bonds for their operating expenses.[1]

Could the federal government also balance their budget every year? That’s a much more difficult question. For one thing, the Federal government has both monetary policy and fiscal policy. States have only fiscal policy, and far less of it. The federal government sometimes needs to use its fiscal policy to really stimulate the economy (in a way that states cannot do) and to avoid a recession or even depression. But I wouldn’t argue with those who advocate for the federal government doing a much better job of trying to balance its budget each year.

[1] States have, on occasion, gone out to borrow for the purpose of shoring up an immediate deficit, but that runs the risk of having their bond rating downgraded. States work very hard to avoid having to choose this option.

About a1skeptic

A disturbed citizen and skeptic. I should stop reading the newspaper. Or watching TV. I should turn off NPR and disconnect from the Internet. We’d all be better off.
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1 Response to Don’t be Impressed when a Governor tells you how often he’s “Balanced the Budget”

  1. My question is why do we even need to elect human beings to run our lives when each individual is perfectly capable of rolling out of bed to knock out their daily tasks?

    Now granted this writer understands that humanity’s cheese tends to fall off its cracker, even routinely in some cases.

    However, this does not dismiss the fact that a political pundit’s deuces don’t smell any better than that of their constituents. I.e. government is a sophisticated form of tribalism that constricts the manner in which others can enjoy their limited experience here on Mother Earth.

    Monkey see, monkey doo LOL
    Many Blessings, great point regarding the illusion of success.

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