Meanwhile, Paul Krugman reminds us that Enron wasn't the only large organization in Texas that indulged in questionable accounting practices:
- For example, in 1999 the governor of Texas --- yes, him --- justified new corporate tax breaks with a budget that not only understated Medicaid costs by $550 million but hid regular payments for nursing care and other services by moving them from the last month of fiscal 2001 to the first month of 2002.
This was part of a pattern of state tax cuts (many pushed through by Republican governors) in the boom of the late '90s, many of which were based on similar tricks --- Republican Governor James Gilmore of Virginia, for instance, booked the value of all future payments in the tobacco settlement as current revenue.
The states are now feeling the squeeze, since they're heading into deficits, and, in most cases, their constitutions won't let them borrow to cover.
That's as opposed to funny-money tax cuts at the federal level, where borrowing is allowed and the squeeze can compound for quite some time.