This is the first year in many years when I have not spent the evening of the Governor’s State-of-the-State Address reviewing the Governor’s proposed budget or seeing if the Governor said anything of import about education. My hunch is that I did not miss a whole lot – and I’ll catch up on that news soon enough.

• State government is going through a period of budget cuts. Been there, done that. Good administrators anticipate budget cuts by leaving positions vacant. Throughout the early part of the last decade, I was always able to keep one year ahead of budget cuts by leaving positions vacant strategically.
• With little new money (it doesn’t matter how large the cuts, someone somewhere will get some new money), legislators will spend 60 days fighting over issues of marginal import.  Smart agency heads will find unimportant things to keep them busy so they don’t cause too much harm.
• The Governor’s lame-duck status will become even more apparent than it already is.  A governor’s primary power is budgetary, and budget cuts hit a governor particularly hard politically.
• The major topic of discussion may be other post-employment benefits (OPEB).  The state made a lot of promises to employees it will have a hard time keeping.  Fortunately (or unfortunately depending on your perspective), governmental accounting standards now expect the state to book, and ideally create a reserve to cover, this shockingly large future liability.  Do realize that the book value of OPEB liabilities is quite speculative because we really don’t know the extent to which health care costs will rise. (State retirees’ health coverage is OPEB).  If this nation could reign in rising health care costs, OPEB would be a smaller problem for state government.  So the decisions in Washington, DC over the coming weeks and months probably will be just as, if not more, important than the decisions in Charleston.

A question for public policy wonks:  What major sector of the United States economy has seen costs rise more quickly than the health care sector – and by a wide margin?  Tune in tomorrow.