It's Starting To Rain.(ISSUES & INSIGHTS)(EDITORIALS)

Budgets: As a new financial year begins, states have another chance to put their fiscal houses in order. But to do so, they'll first have to understand their mistakes.

States ended fiscal 2003 in their worst shape in decades, swamped with red ink. As of Tuesday, the first day of fiscal 2004, California and a handful of other states still hadn't enacted new budgets.

Justly, California has gotten most of the attention because it's the nation's largest state. But it's also the grossest violator of fiscal norms, creating a mind-boggling $38 billion deficit in just over two years -- an unparalleled lurch into financial irresponsibility.

Can we learn something from the states' predicament? Of course.

For one, contrary to what the states themselves claim, "government mandates" aren't blame for their woes. The states' own wild spending is. General revenues have grown 46% since 1990 while spending has surged 50% -- twice as fast as the federal budget, the Heritage Foundation recently noted.

As for mandates, a Congressional Budget Office study notes that since 1995, federal mandates have added $9 million in spending on average to each state's budget. That's less than 1% of state spending.

Yet the federal government has ponied up $20 billion to bail out the states.