Free-Market Thinking Is Key For States To Avoid Financial Disaster
It’s shocking to see the budget horror stories coming out of two of the nation’s leading states. Illinois and Connecticut are in fiscal freefall, and their leaders are taking the exact wrong approach in their misguided efforts to turn things around. If they were smart, they would look to the example of states like Florida to discover how to weather fiscal storms.
Illinois faces a staggering budget gap of close to $10 billion, a crisis worsened by a state pension program funded at just 37 percent and credit downgrades that leave the once-proud state just one step above junk status. Saddled with their blue-state mentality, Illinois lawmakers are doing what they do best, trying to solve the problem by raising taxes – somehow thinking they can dig their way out of the hole they’ve created.
Connecticut, meanwhile, must cope with a roughly $2 billion budget hole and the departure of key employers like General Electric and Aetna. Applying the same erroneous approach as their brethren in the Land of Lincoln, politicians in Connecticut are considering bringing back toll roads in hopes of raising enough revenue to get their budget in balance. They seem to think that if only they extract a little more from their taxpayers, they can make their financial problems magically disappear. They clearly are forgetting the well-known definition of insanity: “Doing the same things over and over, but expecting different results.”
Largely overlooked amid the media’s unrelenting focus on the Trump White House was the publication this month of an invaluable comprehensive research study by the Mercatus Center at George Mason University. Mercatus’ annual “Ranking of the States by Fiscal Condition” points directly to a conclusion that Illinois, Connecticut, and so many other struggling states should begin to embrace – that conservative fiscal principles lead to prosperity.
As the President and CEO of Florida’s oldest and largest policy think tank, this reality is no surprise to me. For 30 years, The James Madison Institute has worked alongside our policymakers, elected leaders, and citizens to embrace the principles of limited government, free markets, rule of law, and the protection of private property. This approach unmistakably is working. The Mercatus research team, among the most comprehensive and professional in the nation, spent several months dissecting the finances of each state in five separate categories and across dozens of specific financial indicators, and ranked Florida’s fiscal condition Number 1 in the nation.
To be sure, this type of success does not happen overnight. Florida has been blessed with tremendous, conservative leadership over the past 20 years, championed by the likes of Jeb Bush, Marco Rubio, and Rick Scott, among others. Over those two decades, we have seen Florida succeed and thrive despite unrelenting challenges. The housing crisis and the Great Recession hit Florida harder than just about every other state, and it was the conservative free-market principles embraced by the state’s leaders that helped us rebound faster than anyone.
Moreover, from 1994 to 2014, more than $125 billion in annual adjusted gross income migrated to Florida from high-tax states like Illinois and Connecticut. That economic benefit is coming here not in spite of the policies of the state’s government, but because of them. In just the seven years under Governor Rick Scott, Florida has added well more than 1 million private sector jobs. State legislators have enacted sound and practical tax policies designed to keep government overreach at a minimum and prosperity at a maximum.
The numbers tell a compelling story. Florida’s annual state budget of roughly $83 billion pales in comparison to that of New York’s $150 billion. So what has the Empire State gotten for all those billions? A ride swerving around the potholes of the New York Turnpike suggests the answer is: not much.
Mercatus’ new report should hit politicians in Illinois, Connecticut, New York, and other liberal states like a punch in the gut. Whether they pay heed is yet to be seen, but I would be surprised if they do. However, no one should be surprised by the rankings from the report and Florida’s premier standing. Freedom works every time it’s tried.
J. Robert McClure, Ph.D., is president and CEO of The James Madison Institute, a statewide think tank based in Tallahassee devoted to research and education on public policy issues.