Daily Austerity Watch: Hard Choices For Governors

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By Douglas A. McIntyre Published
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The forces of austerity are taking it on the chin in state capitals.

Pennsylvania Gov. Tom Corbett (R) is facing a revolt by members of his own party over his plans to slash $1.6 billion from the state’s budget for public schools and universities. As the Associated Press notes, House Appropriations Committee Chairman Bill Adolph wants to restore $387 million to  state-supported universities and $210 million to public schools.

“Restoring this funding for basic education demonstrates our commitment to preparing Pennsylvania’s youth for a successful future as well as the legislature’s dedication to controlling local property taxes,” Adolph said in a press release.  “Making more funding available for higher education will ensure more students will be prepared for the high-tech jobs of tomorrow.  This is an investment in our kids, our economy, and an investment in our state’s future. ”

Interestingly, Corbett also backs establishing a $2 billion pot of money over which he would have sole discretion called the Liberty Loan Fund.  Legislators are skeptical, to say the least.   The former State Attorney General seems to be looking to New Jersey Gov.  Chris Christie (R) as his role model.   But the blustery, rumored presidential candidate has problems of his own.

A special master appointed by the New Jersey Supreme Court recently found that he improperly cut $1.6 billion from the education budget.    The recommendation is now being considered by the Court and Christie has hinted that he may ignore any ruling that goes against him.   Democrats and  the New Jersey Education Association — perhaps Christie’s biggest critics — are aghast.  The New York Times in an editorial called such a move “political theater” and “inexcusable.”

Christie, never one for subtlety, probably could care less what the New York Times editorial writers think of him, or any of his other critics for that matter.  He also isn’t shy about spending taxpayers’ money, such as the $200 million to help develop what will be America’s largest mall.

Corbett and Christie are hardly the only governors walking a fiscal tightrope.  Connecticut Governor Dannel Malloy (D), who fashions himself as the anti-Christie,   is battling state unions to win concessions on wages and benefits.  Those efforts have so far came up short and today layoff notices are being sent to more than 4,500 state workers, according to the Hartford Courant.

Texas Gov. Rick Perry (R) is giving Formula One racing a $25 million subsidy yearly subsidy  for a decade as 10,000 teachers may lose their jobs as the state tries to pare down its $15 billion deficit over the next two years.

“For $25 million a year, the state could pay more than 5,000 teachers an average salary of $48,000,” according to Bloomberg News.

Budgets are all about choices.  Some are clearly better than others.

Photo of Douglas A. McIntyre
About the Author Douglas A. McIntyre →

Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.

McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.

His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.

A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.

TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.

McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.

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