Why states pass budgets despite rising political divide

Even Illinois finally put partisan wrangling aside to raise taxes and begin digging itself out of a deep fiscal hole. But polarization is growing in state politics.

States are supposed to be the places where government works, where politicians put aside their differences to pass good programs and balanced budgets. But that reputation for pragmatic compromise looked threatened this year as legislatures in nine states – an unusually high number – failed to pass budgets by July 1, their new fiscal year.

Declaring a state of “civil emergency,” Maine’s governor partially shut down state government for three days this month, no longer renewing driver's licenses or registering titles for cars.

A budget impasse caused New Jersey’s governor to close its parks and beaches to everyone (except himself and his family, as it turned out).

In Illinois, things are so shaky that it faces the risk of becoming the first state to have its debt downgraded to junk, a development that would cost residents millions of dollars in increased interest costs.

So, in an era of rising partisanship, does state government still “work” – or are the missed deadlines and partisan rancor a taste of what lies ahead for states?

The answer is nuanced. When it comes to social issues, which often get wrapped into budget bills, polarization appears likely to continue to rise. But on actual spending measures, partisanship has its limits. For political and procedural reasons, most states are expected to continue forging the necessary compromises to keep state government from grinding to a halt.

Already, the pressure to reach fiscal compromises is visible. Over the four-day stretch from the weekend to Tuesday’s July 4 holiday, Delaware, New Jersey, and Maine reached budget deals.

Even Illinois, entering an unprecedented third year without a budget, passed a major income-tax increase and, with the help of Republican legislators, the Senate overrode the Republican governor’s veto. The Democratic-controlled House is expected to do the same this week.

Yet there’s little doubt that polarization is rising in most state legislatures – with far-reaching consequences.

“What we're seeing at the states is a mirror of what we're seeing at the national level,” says Boris Shor, a political scientist at the University of Houston who has studied the issue. “A lot of the policy battles that we've seen at Congress are getting shifted over to the states.”

Rising divisions

Looking at 15 years of survey and roll call data, he and fellow researcher Nolan McCarty of Princeton University found that 15 states were more polarized than Congress in 2011. “California is by far the most polarized state legislature, and Congress looks decidedly bipartisan by comparison,” they wrote then.

Since that time, the partisanship has become more extreme, with Colorado passing California as America’s most polarized state, according to updated figures on the researchers’ website. States in the West are where polarization is rising the fastest. And unlike at the national level, where Republicans in Congress are widening the chasm by moving to the right, the picture is more mixed at the state level, where Democrats, more than Republicans, are driving the trend by moving to the left.

One factor behind the polarization: the nationalization of politics.

“While voters elect and hold the president responsible for one job and state legislators for another, the outcomes of their elections are remarkably related,” concluded Steven Rogers, a political science professor at Saint Louis University, in a study last year.

He found that changes in a president’s approval rating was three times more important in electing state legislators from the same party than voters’ assessments of the state legislature itself. “While state legislatures wield considerable policymaking power, legislators’ electoral fates appear to be largely out of their control,” he wrote.

And because social issues, such as immigration and abortion, are stalemated at the national level, they’re being played out increasingly in the states, says Professor Shor.

Rules that nudge toward pragmatism

The exception is budgets, which unlike social issues that directly affect only a minority, hit every state resident, he adds. Very few governors or state legislators have been unwilling to compromise when their own electoral prospects were involved.

“There’s such a strong incentive from the practical standpoint” to enact a budget, says Scott Pattison, executive director of the National Governors Association. “There are real quick impacts at the state level if you don’t have a budget.”

Every year a few states fail to pass a spending plan before their new fiscal year, especially this year because “there are some really tough budget issues out there,” says John Hicks, executive director of the National Association of State Budget Officers (NASBO).

This year’s impasse in nine states was unusually high, he adds, but states have certain legislative measures in place that help push compromise. Every state except Vermont must balance its budget, according to the National Conference of State Legislatures (although by other definitions only 46 states have balanced-budget laws). In addition, 44 states give their governor’s line-item veto power, which means they can strike down individual items in spending measures passed by the legislature.

Moreover, 31 of the 50 state governments have the same party holding the governorship and a majority in both legislative houses. In Michigan, for example, Republican Gov. Rick Snyder got the GOP-run legislature to agree to a budget before July 1 for seven straight years, even though the budget year doesn’t start until Oct. 1.

One-party control doesn’t always work. Wisconsin Republicans, for example, don’t have a budget because they can’t agree on funding for road construction. Rhode Island is also the scene of a budget stalemate over cuts in auto taxes, with a Democratic governor trying to get the House speaker and Senate president (both Democrats) on the same page.

Key states to watch are Kansas and Illinois.

A Kansas experiment

In Kansas, deep tax cuts enacted by Republican Gov. Sam Brownback proved so unpopular that, in the 2016 elections, moderate Republicans ousted 14 conservative state legislators in the primaries and Democrats gained some additional seats in both state houses.

The Kansas experience suggests there might be some limit to the amount of polarization that voters will accept when it comes to budget issues, Shor says.

In Illinois, conservative Gov. Bruce Rauner battled the Democratic majorities in both Houses by vetoing measures that raised taxes, so that the state went two years without a budget, racking up billions of dollars in unpaid bills, forcing cuts at state colleges and universities, and risking a downgrade to junk status – which may still come about if the state doesn’t begin to clean up its fiscal mess.

Governor Rauner is up for reelection next year.

“You are going to see both sides spin the outcome” for next year’s elections in both states, says Mr. Pattison of the NGA, but it will come down to the voters. “Ultimately, who do they believe the most?”

As long as the economy doesn’t tank, fewer states will miss their budget deadlines next year, predicts Mr. Hicks of NASBO. State legislatures by and large don’t let partisanship run wild, “not to the point of stopping the machinery of government.”