September 16, 2012 in Opinion

Smart Bombs: Tax and spend comes to an end

By The Spokesman-Review
 

State Treasurer Jim McIntire stopped by the editorial board last week with some revealing graphics about what’s happened with revenue and the budget in Washington. These are pictures lawmakers on the various budgetary committees have seen. McIntire declined to opine on how they’ve reacted, so I will.

The first graphic that caught my attention was a pie chart showing how lawmakers and the governor went about balancing the budgets for the 2009-’11 and 2011-’13 bienniums.

For 2009-’11, 46 percent of the solution came from spending cuts, 28 percent from federal funds (stimulus), 16 percent from revenue transfers and 10 percent from new revenue. So for every $4.60 they cut, they raised $1 in revenue.

For 2011-’13, federal stimulus essentially disappeared, dropping to 1 percent of the solution. A total of 80 percent came from spending cuts, 11 percent from revenue transfers, 5 percent from new revenue and 3 percent from cash management. So for every $16 they cut, they raised a buck in new revenue. That’s a nearly four-fold increase in emphasis on spending cuts over raising taxes.

The second graphic is titled “The Size of State Government Relative to the Economy Continues to Shrink.” It depicts a steady downward trend line from 1995 to 2015 (the next three years are projections), with a temporary rise just before the housing bubble burst. In 1995, general fund revenue was nearly 7 percent of personal income. This year, it dipped below 5 percent and is headed for 4.5 percent barring any changes.

Clearly, state government is a lesser burden on taxpayers than it used to be. Those who have battled for this outcome have won. So, take a bow.

However, this decline closely tracks the drop-off in the state’s commitment to higher education. So if you’re facing tuition bills, then your burden has grown substantially.

One way to look at this, McIntire says, is to consider how long a large business could hope to stay profitable and competitive by cutting its budget for research and development so precipitously. Many state lawmakers look at these graphics and proclaim, “We don’t have a revenue problem.” Many of them are also fond of saying we should run government like a business.

Like a business that has stopped spending on R&D?

Couldn’t care less. Let’s say you’re a lawmaker in Idaho who detests the politics of President Barack Obama. How far would you be willing to go to demonstrate your principled opposition to his health care policies? Apparently, the answer is far enough to cut off many poor people from health care and burden taxpayers in the process.

Legislative leaders chose to turn down federal funds for setting up health care exchanges, so they need to plunder state funds for it. And now they’re advocating the rejection of federal funds that would greatly expand Medicaid, which would help low-income people.

Spokesman-Review reporter Betsy Z. Russell reported the grim details last Sunday. Because of the state’s peculiar way of handling aid for patients facing catastrophic medical bills, Idaho could possibly benefit the most from the Affordable Care Act, which includes a large increase in Medicaid funding that is totally covered by the federal funds for the first three years. The federal share “bottoms out” at 90 percent.

Furthermore, the state’s property owners, who finance the current catastrophic care system, would save hundreds of millions of dollars if the state accepted this fabulous bargain.

Sen. Joyce Broadsword, R-Sagle, who is vice chair of the Senate Health and Welfare Committee, looks at the arithmetic as any smart business person would.

“I am in favor of expanding (Medicaid), mostly because we’ve got a huge population out there of uninsured that are putting off health care needs, especially catastrophic care, because they can’t afford to go to the doctor. And if we can get people doing preventative care and going to the doctor early and catching melanomas before they’re bad enough to kill a person or go through major chemotherapy, if we can touch obesity before they develop diabetes or heart disease and get them on track to being healthy, it’s going to be, in the long run, a healthier population and a money-saver for the state’s accounts.”

However, Obama is for it, so legislative leaders must be against it. It’s apparently part of some blood oath that trumps reality, compassion and common sense.

Associate Editor Gary Crooks can be reached at garyc@spokesman.com or (509) 459-5026. Follow him on Twitter @GaryCrooks.


There are 10 comments on this story. Click here to view comments >>

Get stories like this in a free daily email