Sunday, May 29, 2016

The Hole in the Budget Apparently Meant the Budget for New Highway Spending

A few months back Governor Asa Hutchinson said that if the state did not keep taking Obamacare money that it would "blow a $200 million dollar hole in the budget." The legislature voted to stay in Obamacare so as to continue taking money from the deeply troubled program.

That was a few months ago. We now learn from a Demo-Zette article that the Governor plans to budget 25% of the state's budget "surplus" into aggressive new spending on highways. He estimates that amount to be $48 million dollars annually.  So we go from panicked cries of a $200 million dollar hole in the budget if we don't agree to stay on Obamacare, to a few months later the Governor talking about a "surplus" of such a magnitude that 25% of it equals $48 million. That means it would be about $192 million per year.

So while he was complaining about dire fiscal shortcomings if Arkansas did not continue the generational looting that is Obamacare, the truth of the matter was that Arkansas was collecting far more taxes than it needed to fund current operations. The Governor just wanted extra money, general revenue money, for his highway plan. Traditionally, highways have been financed by economic activity related to highways, such as fuel taxes and licence fees.

I used to complain when Governor Mike Beebe did things like this. He would claim there was a lack of money when he wanted to raise taxes, or claim there was plenty of money when he wanted to spend some. Then months or even weeks later legislators would discover the opposite was true. They had based their votes on information from the Governor's office- and that information was deceptive. Now it appears that the legislators cannot trust the budget information which comes from Governor Hutchinson's office. Neither can we. It is a shame, but it would be a bigger shame if I complained when Beebe acted in an under-handed manner but then said nothing when Hutchinson did the same thing. I should point out that many of these legislators wanted to be lied to and repeated the party line with gusto.

Look, the Highway Commission in this state is a deeply flawed way to allocate highway dollars. We should not put any additional money into this system until it undergoes fundamental reform. Remember we just (2012) gave them an additional half cent sales tax on top of their other funds, and now they want much more. Read this article from 2012 over that issue and to describe in more detail why our Highway Commission should be scrapped.

The bottom line is that if building more highways was the path to prosperity, we should already be prosperous because we over-spend on highways relative to our size and GDP. Instead we are struggling. Our growth engines are government (Little Rock) and Northwest Arkansas. Northwest Arkansas did not become a growth engine due to highways. Quite the opposite. First private business generated destinations worth going to, and eventually some highways followed.

So I do have some complaints about the system that the Governor is suggesting we pour this surplus into- its a wasteful system. But my biggest complaint is that he mislead the people and the legislature of this state by implying that we could not afford to leave Obamacare.  Now it turns out we have a huge surplus. He wants to spend it on highways. The legislators may have wanted him to lie to them, but I didn't. A lot of us didn't. My complaint is that we can no longer trust what he says about the budget.

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