Mismatch

Washington's budgets are killing our country.  Yes we know that record deficit spending is doing considerable long term damage to the fiscal solvency of our country, but it's more insidious at the state level, where each year's rise in federal spending forces states to either spend money they don't have, raise taxes, or lose out on much needed federal funds to augment their own services.  Specifically, "maintenance of effort" clauses in practically every funding steam that comes from Washington to the states, is forcing each and every state to increase their own budgets disproportionally and to their own detriment.

Take Michigan for example.  Governor Failure, I mean Jennifer Granholm, in her (thankfully) last state of the state speech this week, lamented the fact that the Michigan will spend $800 million less on road projects for the next few years compared to the $1.4 billion we'll spend this year because we cannot generate enough funds from our current gas tax to meet the requirements for a federal match.  Michigan is a donor state, meaning that we send more money to Washington then we get in return.  In fact, according to something called Scribd.com, we rank 5th as a donor and 47th as a recipient of net federal tax benefits.  We get back 92 cents in federal transportation dollars for every dollar we send in to federal fuel tax.  Without an increase in our gas tax, we will go from 92 cents to 50 cents in a few short years.  A bill has been introduced in the MI House to raise our gas tax from 19 to 23 cents, and diesel from 15 to 21 cents per gallon.  In just three years, both would be 27 cents per gallon.  These tax increases would raise just enough funds to meet our federal match over the next five years, going from $240 million next year to twice that amount beginning in 2013.  Folks this is just to meet our transportation match.  There are other such requirements for Medicaid/Medicare, education, public safety, job training, you name it.  

Of course Washington, especially under Barack Obama, will continue to put our states through this perilous tail chase unless we end this practice now.  Short of that in the near term, we should at least demand a drop in the percentage of the match requirement from say 20% to 10%.  Trying to raise taxes anytime should be a difficult thing to do.  In a recession it's downright criminal.