State Constitutions as Fiscal Fulcrum

Guest Blogger

For the Balkinization symposium on David Schleicher, In a Bad State: Responding to State and Local Budget Crises (Oxford University Press, 2023).

Daniel B. Rodriguez

David Schleicher’s outstanding new book is an instant classic, in its breadth and erudition on the highly complex topics of fiscal policymaking in times of crisis and also in its handiness as a one-stop-shopping for students and scholars who hanker for a comprehensive resource in understanding these issues from both positive and normative perspectives.  As he concedes at the end of the book, one’s ultimate views on the sense of one or another scheme of addressing crises will turn on one’s fundamental principles of the role of government.  How to resolve the tradeoffs Schleicher describes requires judgments that are “deeply ideological.” [121]  Still and all, the book makes and explains the essential point – that We the People cannot have our cake and eat it too.  There is an unavoidable trilemma.  Feds want to avoid the harms that come with spending cuts and tax increases, to avoid moral hazards, and ensure that states and cities can continue their access to capital markets so as to invest in infrastructure projects.  That they cannot implement all of these goals simultaneously is a hard constraint on policy choice; and so the federal government needs to navigate this trilemma by conspicuous awareness of and accounting for this trilemma.

The principal focus, and hence the audience, for this book is the federal government.  There is plenty to manage with respect to these complex issues just at the federal level.  And yet what I am dying for is really a sequel, one that fills out the analysis that Schleicher gestures toward at the very end of the book, in a section entitled “Why States are often Bad?”  Herein lies a profound statement of his:  “[T]e primary responsibility for addressing state and local fiscal problems lies with state and local governments.” [167].  This point is not developed in this book, for Schleicher’s focus is here on the feds.  There are many things to say about state and local governments in this space, as the robust body of scholarship by political scientists, economists, and legal scholars, indicates.  Moreover, this vein of research is likely to expand as on steroids, given the greater interest among public law scholars in matters state and local (we might see Dobbs and the post-2020 election cases as major engines of this renewed interest, but that’s a story for another time).  Just to surface a small sampling of the questions that the trilemma raises for scrutiny of state and local decisionmaking, consider:

·         How do the framers of state constitutions construct the conditions under which state governments make choices about who gets to decide on both policy and fiscal strategy?  This question cannot be answered by resort to simply the “law on the books” regarding the scope of local authority under, say, municipal home rule provisions.  It entails a more omnibus, and complex, set of choices about the lanes in which municipalities, state governments, and special purpose governments of various types are expected to operate.  State constitutions (which we know to be much more malleable than our U.S. Constitution) have something to say about all this, and we need to figure out what that is – and ultimately what that should be; 

·         What are the roles and expectations of state officials in different roles – legislative, executive, judicial, and administrative – in making fiscal policy and, to the point of Schleicher’s inquiry, addressing fiscal crises?  In some ways, this inquiry parallels an equivalent question for federal officials (which, let me quibble, Prof. Schleicher doesn’t really delve deeply into here).  But the nature and content of the inquiry will yield some interestingly different answers, given the distinct character of state institutions (think, for example, of the plural executive and of the elected judiciary); 

·         How does the electoral structure of the state matter to these issues?  One consideration that of consequence – and, in some Western states, significantly so – is the role of direct democracy.  As we read Schleicher’s thick description of budget crises throughout U.S. history and his recommended tools for improvement, it is intriguing to think about the way in which voters deciding in the black box of a voting booth on policy directly, rather than filtered through elected representatives (who, after all, owe a duty of transparent voting), would steer decisions in one direction or the other.  As I argued many years ago, the fact that state legislators can and do engage in logrolling in their state legislative capacities provide, at least in theory, opportunities for enhancing local power overall.  But this could be undermined as voters act directly, and in secret, through schemes of direct initiative lawmaking; 

·         If we think of state and local governments as not especially collaborative, but, instead, in competition with one another, which public choice and positive political theory perspectives on governmental decisionmaking suggest, what does this portend for state and local choices about fiscal crises?  Part of the subtext of Schleicher’s argument, as I read it, is that the federal government’s role in tackling the trilemma is essential, not only because of the greater ability of the feds to manage the scale and scope of these impactful issues, but also because they must act as a referee for conflicts between state and localities.  (We saw this, for example, in his discussion of bond indebtedness in the 19^th century). 

There are legions of other questions pertinent to the matter of the state and local governments as having the primary responsibility for solving fiscal problems.  We might push this point step further and say that state constitutions are at the fiscal fulcrum of these matters.  We look to these documents (and by “documents” I mean everything in the kitchen sink, including text, history, state court interpretations, and practices broadly defined) to establish the blueprint for fiscal choices and, where matters go awry, for tough decisions to solve crises.

I have previously written about the puzzle of state constitutional failure.  The question that looms large under our scheme of state-by-state governance is how to determine whether and to what extent state constitutions have failed, that is, whether the fundamental conditions and abilities of state and local governments to rise to the challenge of governing in a coherent, productive way on behalf of our citizenry have eroded to such a degree that major reconstructive surgery is required.  We can and should debate exactly what such surgery entails, noting that this is a matter relevant to each layer and evel of government, local, state, and national.  But in order to frame prescriptive analysis, we need to have a more cogent way of evaluating and measuring dysfunctionality, in both constitutional design and performance.

A broad ranged group of public law scholars are working hard on these and related puzzles.  The impresario of this blog, Jack Balkin, has written on “constitutional rot.”  My former colleague, Sandy Levinson, has contributed enormously to our study of deep constitutional failure.  Aziz Hug and Tom Ginsburg have taken us into the stormy topic of how we might lose a constitutional democracy.  And, looking at matters of state democracy in particular, Miriam Seifter has illustrated some the fundamentally anti-democratic features of state legislative lawmaking, certainly a component part of what we might think of as a source of state constitutional failure.  These are merely illustrative of a vast and growing body of work that helps us see the predicament.

What David Schleicher’s excellent book illustrates is the principally constructive role that the federal government can and should play in helping to orchestrate solutions to the budget crises that we frequently find our ways into, given all the pressures pushing toward fiscal difficulties and even disasters.  Reading this book as a resident of the great city of Chicago, the city of Big Shoulders that thrived so mightily in the 19^th and 20^th centuries as a combination of economic factors drove progress, I was often deflated as Schleicher weaved the story of Illinois’s deeply-embedded fiscal crisis throughout his narrative of what it means to be “in a bad state.”  Situated somewhere between pessimism and optimism, I can say only that the road out of our profound and steadily worsening pension crisis requires tough choices by all levels of government.  We need to discover whether our state constitution has failed.  If so, we need to attend to its repair, through democratic choice largely the province and prerogative of well-intentioned Illinoisians.  If not, we need to mobilize resources and strategies to work constructively with federal authorities, and along the broad lines that Schleicher recommends in this book (more a work of hope, than a jeremiad), to solve these intersecting problems of governance and finance. 

Daniel B. Rodriguez is the Harold Washington Professor of Law and Dean Emeritus at the Northwestern University Pritzker School of Law.  daniel.rodriguez@law.northwestern.edu.