OUR OPINION: 'Day of Reckoning' hits states
A suggestion for North Dakota and Minnesota lawmakers who are about to go into legislative session: Before you journey to Bismarck or St. Paul, go online and watch the CBS News "60 Minutes" report, "The Day of Reckoning."...
A suggestion for North Dakota and Minnesota lawmakers who are about to go into legislative session: Before you journey to Bismarck or St. Paul, go online and watch the CBS News "60 Minutes" report, "The Day of Reckoning."
For years, a handful of websites (notably pensiontsunami.com) and occasional commentaries have tried to communicate the massive size of the fiscal tidal wave rolling toward many states. With the national broadcast Sunday of the "60 Minutes" account, that warning just got a lot harder to ignore.
Lawmakers must pay attention -- including lawmakers in North Dakota, even though the state is running a surplus. For California and New Jersey -- among other states now facing insolvency -- enjoyed good times not all that many years ago, too. But they behaved recklessly, and now the bill is coming due.
North Dakota and Minnesota alike should watch and learn.
"California, which faces a $19 billion budget deficit next year, has a credit rating approaching junk status," Steve Kroft reports on "60 Minutes."
"It now spends more money on public employee pensions than it does on the state university system, which had to increase its tuition by 32 percent.
"Arizona is so desperate it sold off the state capitol, Supreme Court building and legislative chambers to a group of investors and now leases the buildings from their new owner. The state also eliminated Medicaid funding for most organ transplants."
Then there is Illinois, which is six months behind in paying its bills. "It's fair to say that there are tens of thousands if not hundreds of thousands of people waiting to be paid by the state," says Dan Hynes, Illinois' comptroller.
Kroft listens to Illinois' tales of woe, then concludes, "The state's a deadbeat."
"Yeah," agrees the comptroller of Illinois.
"I mean, the state of Illinois is known as a deadbeat state. This is a reputation that has taken us years to earn and we've reached, you know, the heights of, I think, becoming the worst in the country."
And that's just the states. In a fresh piece of reporting, Kroft interviews Meredith Whitney, a well-known financial analyst who sounded the alarm about Wall Street a full year ahead of the fall 2008 meltdown.
A great many cities are in even worse shape than the states, Whitney tells Kroft. In fact, she says, "you could see 50 sizeable defaults" among municipalities in 2011, "fifty to 100 sizeable defaults" amounting to "hundreds of billions of dollars."
North Dakota is running a surplus, as mentioned above. And while Minnesota's budget is unhealthy, it's not on the critical list in intensive care, as are the budgets of the 10 or 15 worst-off states.
Let's keep it that way. Prudence must be the watchwords of the upcoming sessions. Among other things, that means avoiding the worst-off states' mistakes, which include being far too generous with salaries and pension benefits and far too reluctant to govern in a fiscally conservative way.
As New Jersey Gov. Chris Christie tells Kroft, "The day of reckoning has arrived.
"That's it. And it's gonna arrive everywhere. Timing will vary a little bit, depending upon which state you're in, but it's comin'." North Dakota and Minnesota, read and heed.
-- Tom Dennis for the Herald