Thursday, January 18, 2007

Cutting Through the Fog on Beebe's Budget

When you have $821 million accumulated dollars to spend, and an expectation of around $200 million a year more income than was budgeted in the past, and you have a couple of bulging trust funds to dip into, you are in position to make lots of people happy. Governor Beebe has certainly done that with his proposed budget. My numbers here are rough.

Yes, I am happy about the proposed reduction in grocery taxes that would lower my food tax from 9 cents to 6 cents on the dollar. I am even happy about the 1 cent reduction on utilities used for manufacturing. So much for the full half of the glass.

If you cut through the fog, what we have here is a situation where we the taxpayers overpaid somewhat more than $200 million a year for the last four years, with expectations of continuing to overpay that amount in the future. I evaluate the budget in terms of 1) How much of our $821 million overpayment do we get back and 2) How much of the $200 million plus yearly overpayment we get back and 3) Does government grow faster than our earnings under this budget?

continued- click THURSDAY below and scroll down for rest of story, or if sent straight here just scroll down.


Blogger Mark Moore (Moderator) said...

The answer to number one is essentially "none". We don't get any of the $821 million dollars in tax overpayment back. Beebe's budget gives all of it to various special interests with their hands out.

One thing this allows Beebe to put off until another day (possibly) is a fight with the State Supreme Court. He could have stood up to them and fought it out, but since he has wheelbarrows full of your earnings to throw at education he will do that.

It is probably that this will have the same effect as all the other wheelbarrows of cash thrown at it have done- not much. But it might keep the courts off him- until the next lawsuit.

The answer to the second question is better. The sales tax reductions mean we get all of our past yearly overcharge taken away. We get $219 millon of our money back straight up- which is about the amount of overpayment last year. The other $100 million is coming from stuff like trust fund reductions. I don't count that as "giving us our money back". It is giving with one hand while taking with the other. I only hope the utilities for manufacturing tax cut pays for itself to some extent- but I think it is too small to have much effect.

Of course Beebe has every reason to believe that NEXT years revenues (and overcharge) would be even bigger. In otherwords, we overpaid $219 last year and would have overpaid say $289 million this year if everything stayed as it was. By returning last year's overcharge instead of this year's anticipated overcharge, Beebe gets millions more to spend, and spend it he does.

Government is set to grow 7.5% next year. Are your wages? It is set to grow 4% the year after. Is our economy going to grow 11.5% in the next two years? If not GOVERNMENT will grow faster than NONGOVERNMENT, which is the part that has to pay for GOVERNMENT. That is unsustainable.

Many programs are being expanded with this budget. They will be difficult to un-expand should hard times come. Though I may be a voice crying in the wilderness, I implore the legislature to consider the wisdom of this course.

Do we really NEED to expand preschool? I can show you how the "studies" that say how great it is are flawed. Does higher ed. really need a 10% increase in budget this year when they just got handed $250 million in bond money?

6:26 AM, January 18, 2007  
Anonymous Anonymous said...

p.s. I also count the money spent on $1,000 scholarships for everyone (including I would presume, illegals) as money spent on higher ed.

So they get $250 million in bond money, a 10% increase in budget, AND $1,000 times however many more marginal "students" they can get to spend a semester or two on campus.

6:47 AM, January 18, 2007  

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