Basic economics suggests you can’t spend more than you have, but credit makes it possible and far too many people have gotten into trouble doing just that.

Governments tend to borrow to stay afloat too, financing programs, services, payrolls, anything and everything to keep the trains on time, often falling deep into debt.

Dozens of States have projected shortfalls for the coming Fiscal Year 2012, totalling more than $102 billion, including California with a budget more than $21 billion in the red, Illinois at $17 billion and New York at $14.6 billion.

Last year Rhode Island was in dire straits too, more than $60 million in the red, with declining revenues and soaring unemployment at 12%.

Governor Donald Carcieri saw the numbers and says he realized the only way out of financial trouble was to start making tough choices, showing what he calls “fiscal responsibility.”

Carcieri said it was time to trim the state workforce, through layoffs and attrition, leaving some jobs unfilled, streamlining and combining offices where possible.  He streamlined pensions too, raising the retirement age, cutting benefits and salaries, negotiating tough deals with unions and health care providers.

“When you look at the pay levels, the health benefits, the pension benefits they’re far in excess of what most of the taxpayers have…” the Governor told Fox News, “…so it’s trying to bring those into alignment, really.”

He threatened to shut the government down for 12 days to save more money and trimmed aid to local cities and towns, forcing more sacrifices, ruffling feathers.

Some towns like Cranston had to keep aging police cars on the streets with more than 100,000 miles on the odometers.  There were fewer cops and firefighters to respond to emergencies.  The only public pool stayed closed all summer.

“It might be good news for the Governor” says Cranston Mayor Alan Fung, “but it came at the expense of the local taxpayers and particularly residents at the local level in my city, the city of Cranston.”

Carcieri says he’s positioning Rhode Island for long term growth.  He didn’t raise taxes, actually lowering them for most, he says, and encouraged private business to invest in his state.

There’s been an 11% increase in tax revenue over the past two months compared to last year, a budget surplus of more than $17 million and a rainy day fund of $112 million.  The Governor says it’s evidence the sacrifices are already paying off.