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Lean years left states ailing, study says

Innovation praised; Mass. gets a C-plus

The financial downturn of the past few years has left states with ailing tax systems, neglected infrastructure, and aging workforces, a nationwide analysis has concluded.

The analysis also says many states struggle with basic flaws in their tax systems, bringing their governments too little money to pay for such basic services as roads, healthcare, and schools.

According to the latest Government Performance Project, to be released today, the fiscal crisis drove many states to become innovative and more efficient. The authors of the report, academics from across the country and journalists at Governing magazine, said they hope state leaders will share their examples of good governance.

''There isn't any state that can't learn from the others," said Donald F. Kettl, a political science professor at the University of Pennsylvania and the project's academic coordinator. ''No state really has everything under control. And different states have different lessons to teach."

The study, a project of the University of Richmond that was funded by the Pew Charitable Trusts, an independent, nonpartisan group, awarded letter grades to each state on how it handled finances, personnel, infrastructure, and modern information systems through the downturn, plus an overall grade.

No state failed. Utah and Virginia scored the highest overall, each with an A-minus. Alabama and California scored the worst, each with a C-minus.

Massachusetts was given an overall grade of C-plus. Project researchers noted that voters approved an income tax rollback in 2000, but said the rollback and other factors led to a $2½-billion-a-year revenue loss.

They said Massachusetts had difficulty making up for the loss, despite raising the cigarette tax and cutting $725 million in spending, among other measures. On the positive side, the report said, a tax amnesty program instituted in fall 2002 generated $100 million.

The report sought to accentuate the positive in other states and praised:

Virginia's management of finances, which includes six-year plans and attempts to modernize the state tax system.

Georgia's handling of personnel, which considers its workforce needs along with operating strategy.

Utah's work to keep its infrastructure -- roads, bridges, government buildings -- well maintained. For all new construction, future maintenance costs are included in the operating budget.

The project leaders plan to speak to state leaders and other groups about their findings, which will be published in Governing magazine and online, and encourage discussion.

''We want these results to be in the hands of decision makers," said Susan Tompkins, project director. ''We're going to travel to the states and talk to anybody that wants to talk to us."

The study tried hard not to generalize and noted that each state's experience was unique, both in the problems faced and the solutions pursued, whether successful or not. ''States are rising to the challenge of what they're facing," Kettl said. ''Fifty different states are doing it in 50 different ways."

But several widespread problems emerged, especially ''structural deficits" that left many states struggling to bring in enough taxes to provide the revenue to run their government. The problem has been widely acknowledged by state leaders, who have contended that their tax systems are geared to a 1950s manufacturing economy, not a 21st-century service- and technology-centered one.

But broadening existing tax structures has proved difficult politically.

The report concluded that the healthy 1990s masked the problem, and the spending increases and tax cuts of those years left states less able to overcome the downturn when it came.

Many states have neglected the maintenance of their infrastructure, along with the training and recruitment, the authors found.

In more than half the states, one in five employees will retire in the next five years, and efforts to resolve the problem are worsened by the push for smaller government.

Kettl said the report took no stance about bigger or smaller government. ''What we're saying," he said, ''is the government you have ought to work."

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