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More Talking, Less Spending

Projected health costs, job rates temper optimism

February 2, 2012
By DAVID CRARY - AP National Writer , The Intelligencer / Wheeling News-Register

NEW YORK - Glimmers of economic optimism. Deep concerns about jobs and health care costs. These are among the recurring themes as governors across the nation deliver their annual State of the State addresses. And the speeches have this in common, too: a striking absence of grand and costly proposals.

Overwhelmingly, the speeches are focusing on fiscal issues, mostly in cautious tones.

"Is the current state of our state good enough? I think the answer is no," said Tennessee Gov. Bill Haslam.

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AP Photo
Tennessee Gov. Bill Haslam delivers his State of the State address to a joint session of the General Assembly in Nashville on Monday.

Like many of his counterparts, Haslam, a first-term Republican, hopes state revenues are on the rebound. Yet he still called for eliminating nearly 1,200 state jobs, which would leave Tennessee just shy of 44,000 employees - about 6,000 fewer than in 2008.

It's been a trying few years for governors, with state governments cutting more than 80,000 jobs since the start of the recession. The pace of cutbacks has slowed, but few governors are now calling for large-scale expansion of state payrolls.

General fund spending has rebounded beyond pre-recession levels in 24 states, but the remaining 26 are still a collective $42 billion lower compared with the budgets approved in 2007. Meanwhile, compared to before the recession, states have hundreds of thousands more students to educate in their public schools and colleges, and millions more people eligible for subsidized health insurance.

Delaware Gov. Jack Markell, a Democrat, said the state must rein in costs for Medicaid and employee and retiree health care.

"We have a system that doesn't encourage healthy behavior in patients and doesn't discourage unhealthy behavior," he said. "In essence, we don't have a health care system; we have a sick care system."

As for creating badly needed private-sector jobs, several Republican governors suggested this could best be addressed by further tax cuts. South Carolina Gov. Nikki Haley talked about lowering both corporate and individual income taxes and also took a swipe at labor unions.

"I love that we are one of the least unionized states in the country. It is an economic development tool unlike any other," she said. "We'll make the unions understand full well that they are not needed, not wanted, and not welcome."

Another Republican, Iowa Gov. Terry Branstad, presented a jobs plan calling for a 40 percent reduction in commercial and industrial property taxes, as well as spending $25 million on direct subsidies to companies for creating good jobs.

In Illinois, Democrati Gov. Pat Quinn, also proposed a tax cut - calling Wednesday for an end to the state tax on natural gas.

Tacking modestly in the other direction, Rhode Island Gov. Lincoln Chafee made a pitch Tuesday for new taxes on restaurant meals, pet grooming, cigarettes, car washes and taxi fares.

Chafee, an independent, said higher taxes on discretionary spending is the best way to rescue struggling cities and schools as his state tries to escape its economic woes. Its jobless rate is 10.8 percent, third highest in the nation, and two cities - East Providence and Central Falls - are under state financial oversight.

In Maryland, Democrat Gov. Martin O'Malley made several new tax proposals in his speech Wednesday, aimed at spurring job growth. O'Malley would increase the state tax on sewer bills and impose a 6 percent sales tax on gasoline, to be phased in by 2 percent a year.

In Missouri, Democrat Gov. Jay Nixon proposed another form of revenue hike - a $1 per patron fee increase at casinos to generate about $50 million annually for state nursing homes for veterans.

Even in states that are faring relatively well, governors shied away from ambitious proposals with high price tags.

For example, the major new initiative offered by Massachusetts Gov. Deval Patrick was a proposal to unify the state's 15 community colleges,

"Things are better in Massachusetts than in most other places," said Patrick, a Democrat. "But that doesn't mean they are good enough."

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