Conservatively Speaking

State Senator Mary Lazich (R-New Berlin) represents parts of four counties: Milwaukee, Waukesha, Racine, and Walworth. Her Senate District 28 includes New Berlin, Franklin, Greendale, Hales Corners, Muskego, Waterford, Big Bend, the town of Vernon and parts of Greenfield, East Troy, and Mukwonago. Senator Lazich has been in the Legislature for more than a decade. She considers herself a tireless crusader for lower taxes, reduced spending and smaller government.

"Don't hold your breath"

Economy, State budget

If you believe as many economists do that our recession is over, it will be disheartening to know that our recovery is going to take some time. As I wrote during November 2009, 
“’The recession is officially over’ should be a great headline. However, the good news won’t kick in for months, possibly years later.”

State Legislatures magazine in its February edition concurs with even more grim news reporting that high employment and lower revenues will haunt state governments “well into the next decade” despite some recent glimmer of hope.

The stock market rise continues and the third quarter GDP (gross domestic product) showed growth. However, tax revenues are flat or on the decline, unemployment is high, and demand for state government services also remains high.

Donald J. Boyd, a senior fellow at the Nelson A. Rockefeller Institute of Government, says the timetable to real economic recovery is going to grind and grind. Boyd told State Legislatures magazine, “If you look at the last recession from the point at which the GDP began to recover, it was 17 quarters before employment wages got back to where they were when it started. Consumption is typically highly related to people’s incomes. You expect consumer spending to take a little time to recover. There are reasons to believe it will take a long time.”

NCSL (National Conference of State Legislatures) Executive Director William T. Pound offers analysis I have written about in the past. Pound calls it the “cliff effect,” the sudden end of stimulus funding to the states from Washington D.C.

“The combination of continuing state revenue shortfalls and the decline in federal stimulus funds over the next two years points to a very difficult road ahead for the states,” says Pound.

Rosy proclamations by some economists that the worst is over do not resonate or even matter to the average struggling American. Mitch Bean, director of the House Fiscal Agency in the state of Michigan told State Legislatures magazine, “What’s important to most people is employment. People who are looking for work are not going to recognize the end of a recession because they are either unemployed or underemployed.”

Bean predicts economic conditions will actually get worse before they get better, a sentiment echoed by David Wyss, chief economist at Standard and Poor’s. Wyss says, “Don’t hold your breath. I think we’ve got at least four or five years before we get back to anything approaching normal.”

The time for fiscal restraint is greater now than ever before.

Read more in State Legislatures magazine

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