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A column in Slate by Jack Shafer on the cutbacks in state governments made me spend a large portion of my lunch hour with a calculator and I'm not sure I'm any the wiser.

Shafer, a press critic, spent his time ripping a Washington Post story on how the current economic downturn is forcing states to cut back.

First off, it bears saying that in North Carolina reports from the Fiscal Research Division have been that revenues are running slightly ahead of projections. That's a fancy way of saying that we're getting in a little bit more money than the last budget anticipated so things are hunky and/or dory for the moment. See here if you want the numbers.

Secondly, Shafer points to BEA data that gives me different percentage increases that he has in his chart. I get the trend, but in much smaller bites.

Shafer's central point is that it makes sense for states to live within their means. From his column:

Now, as the stumbling economy forces individuals and families to rein in their spending, it's only sensible that the state and local governments should have to tighten their belts. It's called living within your means. But news stories rarely reflect this sentiment.

In essence, he's making the argument that legislative Republicans have made in North Carolina for years. Essentially, they have argued that the state should increase spending year-over-year no more than a formula that would take into account inflation plus population growth.

All that makes sense in a simple sort of way.

As for Shafer's criticism of the Post story, I'll grant you that the cancellation of 4th of July fireworks isn't a dire outcome and campground closing won't plunge civilize society into chaos.

However, the limitations on health benefits for AIDS patients and poor women seem to be a bit more serious. And the Los Angeles school system facing a seven percent budget cut is nothing to sneeze at, especially since I'm sure there are folks who would argue the school there aren't doing enough.

There is a larger argument to be made that would generally fall into the Democratic or at least politically liberal camp most of the time. It goes something like this: economic downturns increase the stresses in society that make people rely on government services. Everything from courts (more people suing over economic matters, getting in trouble when they violate the law to try and make ends meet, foreclosure hearings) to social services (food stamps, health care, etc...) will see demand for their services go up even as their revenues go down.

I'll leave it to you whether to vest much in either side of the political argument and whether Shafer is right in his assessment of the "Chicken Little" nature of the Post article.

The bigger question for us is whether this is relevant in North Carolina? Well, remember those budget projections? Included in the slides was this warning:

A sluggish national economy teetering on the brink of a recession will lower economic output for the rest of 2008. The aftereffects from the U.S. housing recession and the growing credit crisis could be a drag on the economy well into 2009. The effects of the national slowdown are starting to show up in North Carolina's housing data and the economy-based taxes (see pages 3 to 5).

[snip]

Clearly, a protracted and significant slowdown or recession will dampen expectations for revenue growth in FY 2008-09 and may mean that the tentative 4.6% growth rate will need to be lowered. Continued monitoring of both the credit crisis and the impact of rising food and gasoline prices on consumer spending and job growth is crucial.

So we're not going to be in the position of cutting the current year budget, like they are in New York, California and Virginia. But when the honorables come back in May to tinker with the two-year budget plan, adjusting the piece that runs July 1, 2008 through July 1, 2009, you may be hearing a lot more talk about living within our means. And then we'll very much be having the discussion that Shafer outlines of living within ones means versus cutting what some view as critical government services.