A tale of two states

Here's why it's a good thing that many states have constitutions forbidding deficit operation. Hawaii, which is one of those states, is in good financial shape in the current recession. Governor Lingle has been holding back on a bunch of appropriations -- to the consternation of many, especially when they think she's doing it to take credit for the spending later on -- easing the degree of shortfall caused by declining state tax receipts. This has helped make it possible for the state to speed up some capital works projects, as announced this week. The projects range from highway interchanges at Makakilo to a new concourse for Honolulu airport to harbor work in Hana to picking up river debris on Kauai. All of these projects were already planned and many were already planned for now, but a few have been speeded up to begin during the recession, creating work. Some people want to know what's in it for them if there's more for construction workers to do. That's easily explained. The construction workers take their wages and spend them, returning the money to the economy. You don't have to be one of the workers to be beneficially affected. And, of course, at the end of all this, you get to enjoy the new road or concourse or harbor, perhaps a little earlier than originally scheduled. Contrast this with California, which is not prohibited from running in the red. During good times, as tax revenues grew, there was enormous pressure from citizens to add services of all sorts, hire more police, build more schools, and support nonprofits. Politically, how do you say no to this sort of thing? So the state government began to operate in the red, and the red ink grew deeper and deeper. Then the bottom fell out of the California real estate market. Now the Golden State has a deficit in the double-digit billions, it's getting worse every day, and Governor Schwarzenegger has said he needs to both slash spending AND raise taxes in the middle of a recession to prevent an economic calamity. Lucky you live Hawaii.