Tale of Two States

IT'S very nearly the worst of times in the two largest states in the union. And last week their governors outlined plans to deliver New York and California from budgetary chaos.

Mario Cuomo, freed from the lure of presidential politics, called in his "state of the state" address for a bootstraps program of economic rebuilding.

He wants an $800-million bond act to boost public works and generate jobs. Mr. Cuomo's plans are complicated, however, by this week's downgrading of New York's credit rating by Standard and Poor's. Borrowing now becomes much more costly.

Financial constraints aside, the political reception given the governor's ideas was tepid. Many New Yorkers may still be put off by Cuomo's long flirtation with a presidential race.

In California, Gov. Pete Wilson's address again emphasized his plan to trim welfare payments by up to 25 percent. Funds trimmed from welfare would go to public education as an investment in the future, the governor said.

So California would withhold money from poor families with one hand while promising more dollars for their children's schools with the other. Does this brighten the future or cloud it?

One area the governors agree on is tax hikes. That course is closed, affirmed Mr. Wilson, who risked his GOP bona fides last year with a $7-billion tax increase. Cuomo has taken up the familiar Republican refrain, "No new taxes."

While the budget gaps of California and New York - $6 billion and $5 billion respectively - are in a class by themselves, deficit woes are spread around.

Illinois Gov. Jim Edgar is whacking programs again to close a $500 million deficit. Virginia's worst-ever budget gap helped knock Gov. Douglas Wilder off the presidential campaign trail. New Jersey's Legislature just approved a cost-cutting measure that would deny increased payments to a mother who has additional children while on welfare - an idea also put forward by Wilson.

The states will continue to do their best with what's at hand to resolve their fiscal dilemmas. But two ingredients from outside will be crucial: congressional action to channel more federal funds to the states and lighten the load of mandated programs like Medicaid; and, most important, United States economic recovery.