What Some Rich States Could Learn From a Well-Managed Poor State

I was born and reared in West Virginia but now live in California. The contrast between the economies of the two states could not be more stark. West Virginians (who thank God that Arkansas and Mississippi sometimes keep us from being 50th on lists of economic and social indicators) rank nearly dead last on median personal income. West Virginia’s tax revenues consistently rank in the bottom third nationally. California in contrast has a much wealthier population and takes in by far more tax revenue than any other state in the union, a stunning $104 Billion in 2010.

Yet for all its wealth, California is a fiscal disaster. Through times of growing and shrinking tax revenues, the state’s elected leadership (and its voters through the batty initiative process) have consistently spent more than the state took in. Our credit is now shot and massive cuts that will gut the public sector are the future of the no-longer-so-Golden State.

Meanwhile, throughout the recession to the present day, West Virginia’s elected officials have successfully balanced the budget either with current revenues or with the money they salted away in surplus years (fancy the concept). As mocked as West Virginians may be for a lack of West Coast level sophistication, their state has been well served by the quaint Appalachian habits of not spending more money than you have and putting extra money away for a rainy day.

As I have worked with West Virginia legislators on the state’s addiction problems this year, I have been struck by the fact that they actually have time to think about substantive issues and attend to the practical problems of the citizenry. Most state legislatures used to be that way before fiscal crises and emergency special sessions became the order of the day, and most politicians became too frazzled and pressured to think of much else beyond all the red ink.

Will West Virginia ever have the wealth and health of California? Of course not. But could my adopted state (and many others) learn something about public management from my home state? Absolutely.

[Cross-posted at The Reality-Based Community]

Keith Humphreys

Keith Humphreys is a professor of psychiatry at Stanford University. He served as a senior policy advisor at the White House Office of National Drug Control Policy from 2009 to 2010.