When North Las Vegas started to draw up plans for the new City Hall some five years ago, cash flow was no problem...During the good times, the city created parks filled with features that would make even the wealthiest towns envious — a life-size stegosaurus in one, fully lighted tennis courts in another. It created recreation centers with top-of-the-line equipment and built new libraries in rapidly expanding corners of the community. And it drew up plans for City Hall, with a wellness center where bureaucrats could work out between their civic tasks.Of course: when times are good, governments are going to find it almost impossible to put money aside for a rainy day. After all, no one in Vegas thought the good times were going to end.
If, however, local and state governments were automatically given extra funding during hard times and were required to repay it when they were flush, then they would avoid overspending when it was possible, in favor of a more even approach. Which, of course, is exactly what good economic policy would recommend. But beside from that, it seems to me that conservatives should be particularly against the boom-and-bust cycle in state and local governments, precisely because it is (I would guess) likely to lead to more spending in the long run. After all, there are much stronger constituencies in favor of keeping existing programs than there are for starting new ones. So a government that expands rapidly during good times is unlikely to really retrench as much during recessions.
The strongest reason for some sort of long-term budget neutral automatic stabilizers for state and local governments (LTBNASSLG? Someone needs to come up with a clever short-hand way to refer to this) is the same as the reason for unemployment insurance or FDIC or any of the other depression-proofing that were built-in as part of the New Deal or later adaptations: it's simply good economic practice. But even if conservatives don't believe the Keynesian idea that governments should run deficits during recessions and make it up during booms, they should still, in my view, support a scheme that as they see it should depress the growth of state and local governments.