COLUMN RIGHT / MARTIN ANDERSON : As Cities, States Go Bust, Guess Who Pays Up? : The taxpayer again foots the bill. There’s a desperate need for quality government officials.

The latest economic plague to hit the United States is the sudden and stunning budget deficits of dozens of states and cities. It won’t be long before these shortfalls are translated into more tax increases for millions of Americans.

How on earth could this happen? We have just come through the largest, and one of the longest, periods of sustained economic growth in American history.

The answer, according to most pundits and media reports, is the familiar litany: The terrible Reagan-Bush administrations cut federal aid to the states and cities, the 1990-91 recession cut tax revenues, and now, in spite of Draconian spending cuts, we will just have to raise taxes a bit, especially on the middle- and upper-income groups to keep our state and city governments from collapsing. It all sounds plausible, has a kernel of truth here and there, but the gravamen of the argument is dead wrong.

The Reagan-Bush administrations did not “cut” financial aid to states and localities. They may not have increased it as much as some Democrats would have liked, but federal financial aid did increase: In 1980 federal outlays for aid to state and local government was $92 billion; in 1990 it was $124 billion.

But the most important factor is mysteriously absent from all accounts of the latest budget debacle. During the past 10 years or so, states and cities have enjoyed a whopping increase in tax revenues. One of the best-kept secrets in America is that state and local revenues more than doubled from 1980 to 1990.

Back in 1980, when Ronald Reagan was elected President, the total revenue of state and local governments was slightly more than $450 billion a year. Today it is close to $1 trillion a year--more than twice as much. This simple fact highlights the real culprit in today’s budget mess--gross incompetency and irresponsibility on the part of many elected city and state officials. During the 1980s, billions of tax dollars gushed into city and state treasuries; they were literally awash in taxpayers’ money.

And what did most of these elected officials do? Did they manage the taxpayers’ money wisely, did they achieve any efficiencies with expanding size, did they cut tax rates, did they set aside a little money for a “rainy day” economic recession? Nope. For the most part they spent your money and mine like drunken sailors. As fast as we increased their tax revenues, most of them merrily increased spending even faster. And that is why so many states and localities are in a desperate budget crisis today. It is not because taxes are not high enough, it is because state and city spending is far, far too extravagant and inefficient.

There were warnings. For example, in California--the grossest case of all--Gov. George Deukmejian warned in April, 1990, that “over 90% of the budget is locked in place, programmed and pressured to grow accordingly to formulas and requirements that have no relationship to the growth of state tax revenue . . . . State revenues will grow approximately 8% in the coming year . . . yet, if we do nothing, the overall base of our budget will grow by approximately 11%.” Well, nothing was done. And then along came the 1990-91 recession, partly brought on by the misguided federal tax increases of 1990. Suddenly the party was over. Ten years of irresponsible spending caught up with and overwhelmed many city and state governments.

Some cities and states have been responsible and kept their spending increases under control, matching but not exceeding their increases in tax revenue. But every city and every state now seized with a budget crisis enjoyed huge increases in tax revenues during the 1980s. For now, we will just have to pay up. The taxpayers get stung once again. But in the months and years ahead, let us not forget who is responsible. Here are some things we might consider doing:

-- Do not vote for a single rascal who voted for or supported any of the outsized increases in spending.

-- Impose (in those states and cities that do not have them) limitations on the number of years that any elected or appointed official may remain in office.

-- Think seriously about increasing the salaries of top elected and appointed city and government officials. Their salaries are a small part of the budget. You cannot efficiently run a multibillion government entity with $100,000-a-year executives. Any private company that tried it would go bankrupt. If we really want to control state and local spending, we have to place more talented, motivated men and women in charge, and they don’t come cheap.