Thursday, April 10, 2008

Beebe Trying to Forestall A Drive to Lower Taxes

Last week, April 3, the Arkansas Democrat Gazette reported: "Richard Wilson, assistant director of research for the Bureau of Legislative Research, said he expects the state to have a surplus of at least $ 155 million at the end of this fiscal year on June 30," (having already reached "144. 8 million above the forecast" for this fiscal year in 9 months). 1

Less than one week later, April 9, 08 the Arkansas Democrat Gazette reported: "The state has cut its projected budget for the fiscal year starting July 1 by nearly $ 107 million. The paper even reported, '“Something’s weird,”' said Richard Wilson, assistant director of research for the Bureau of Legislative Research, when informed by a reporter about the revision." 2

There may be a very simple answer for this "weird" development. Governor Beebe may be trying to forestall a drive to lower taxes. The good report on the surplus was released on the day Gov. Mike Beebe signed into law a bill to increase the state severance tax on natural gas, which was a good report for that week. However, there was a cry across the state for the Governor to use this surplus money to finish what he promised he would do when the economy could handle it – eliminate all the sales tax on groceries. The heat made this revision of projected cuts in the budget a good report for this week. And somehow the 2nd report was INADVERTENTLY released a month early.

These two articles raised the following questions in my mind. I hope someone will answer them for me?

Why don't we just take that $144.8 million surplus we already have this year and fund the shortage next year (if there is one)? Or is that money already spent and if so on what? If it is not spent, is it still in the general fund? This week's article indicated this amount of projected reduction in money would be drastic, and "The projected change will lower the funding of Category B to 53. 9 percent of its total. That’s a drop of $ 106. 7 million." If the projected change would affect the state this negatively, why didn't the surplus affect the state just as positively? I didn't hear about anyone's ship coming in this year.

And who actually made these revisions in expectations? Weiss said the reduction reflects Gov. Mike Beebe’s “conservative budgeting philosophy.”

Is the Governor the one that has the economic and budget skills to make these projections on the budget? Somehow I thought these decisions were made by someone in the Department of Finance and Administration.

Who else besides Beebe has input into these projections?

Did eliminating the grocery tax cost the state anything, or did it increase the taxes the state collected? According to an AP story, "Gov. Mike Beebe said Wednesday that he doesn't regret signing a $121 million tax cut [partial elimination of sales tax on groceries] into law last year." It would appear that the state would have been $121 million short in tax receipts this year with the partial elimination of the grocery tax. Instead we are in just nine months $145 million above the forecast. 3

Did the people take the tax saved on groceries and spend it on other things that are taxed? In other words, did this tax cut stimulate the economy in much the same way the stimulus package is supposed to stimulate the national economy? If so, wouldn't it be to everyone's advantage to eliminate all the taxes on groceries?

I hope to get some answers on these questions. I realize the last one would be hard for liberals to answer. Liberals do not believe tax cuts stimulate the economy. That is, of course, unless it is good for their political careers like this year when they decided that extra dollars in the pockets of citizens in the form of the stimulus package would indeed stimulate our economy and also help them get re-elected.

Links:
1. State’s tax collections exceeding expectations by Michael R. Wickline, April 3, 2008.
http://www.nwanews.com/adg/News/221633/
2. Web site tips hand; state cash to tighten by Michael R. Wickline, April 9, 2008 http://www.nwanews.com/adg/National/222212/
3. Ark. governor says no regret over tax cuts despite $107M cut by Andrew DeMillo, Associated Press Writer, April 9, 08 http://hosted.ap.org/dynamic/stories/A/AR_BUDGET_CUTS_AROL-?SITE=ARMOU&SECTION=STATE&TEMPLATE=DEFAULT&CTIME=2008-04-09-14-42-15

1 Comments:

Anonymous Anonymous said...

Great questions. I mean that. Why wouldn't Mrs. (Ms.?) Pelley go to the committee meeting on May 7 and ask those questions? I would hope she does.

3:59 PM, April 10, 2008  

Post a Comment

Links to this post:

Create a Link

<< Home