Budgeting for Disaster: How Budgets
Are Cut
I was at the hearing at House Finance last night,
talking about tax cuts for rich people. The remarkable thing about
all the tax cuts we’ve given over the past 16 years is not that we’ve given
them, but how we’ve paid for them.
As we saw in the last installment,
the story of the past 16 years has been relentless cuts in state income taxes
on the top 1% of taxpayers. The cuts have come in several different forms, but
the result has been the same: dramatically lower taxes on the top end, much
smaller changes for everyone else.
That’s bad enough, but
the real tragedy of the tax cutting of the past 16 years is that not a single
one of the tax cuts passed by the General Assembly was paid for. The income tax
cut of 1997, the car tax cut of the same year, the capital gains tax cut of
2001, and the flat tax cut of 2006 were all “phased in” to avoid having to make
the tough decisions people are always talking about.
But the reduced state
revenue had to be made up somehow. How did we do it? Over that time, we haven’t
cut any major programs. So does this mean that government was too fat? Do we
owe a debt of gratitude to the Almond and Carcieri administrations for finally
starving the beast down to an affordable size? I’d like to share with you my
observations of the five different ways to cut a budget, only the first of
which has any claim to being a hard choice:
- Terminate a program or benefit.
- Supply a program or benefit in a more efficient fashion.
- Supply a program or benefit in a shoddier fashion.
- Borrow to hide the shortfall.
- Foist the cost onto somebody with another source of income.
In my review of state budget cuts over the past
decade, I find very few examples of the first method, though there are some.
Certainly the Medicaid program is somewhat less generous than it was a decade
ago. We cut services for legal immigrant children and pregnant women,
for example. But how many other examples are there? I don’t support
Governor Chafee’s proposal to terminate funding of WSBE television, but I
applaud him for having the temerity to actually propose ending a fairly popular
program.
For the second method,
there are a few good examples. The recent reorganization at DMV might qualify.
Though it also required some new personnel, they are now providing better
service with not too many more people. DOT’s proposal to get designs and
buildings from the same contractor has promise in this regard, and the
construction of the new train station in Wickford seems to have turned out
well.
Unfortunately, too many of these border on examples of
the third category: just doing a shoddier job. The General Assembly has, over
the years, been not at all deferential to the judgment of department heads and
experts about what is actually possible within the budget constraints
presented, with disaster or shoddy service frequently resulting.
The
transfer of 17-year-olds from the Training School to the ACI a few years ago is
an example, and last year’s cut to BHDDH funding is another. A couple of years
ago, delays in food stamp processing were so great that the state lost a class-action suit on the issue.
The Department of
Transportation’s shameful neglect of maintenance is still another example.
Seventeen homes and four businesses in Tiverton are gone today because DOT
didn’t maintain the Sakonnet
Bridge adequately and
they were in the way of the replacement bridge. Nor are they alone in their
neglect of maintenance, as any visit to a state facility will attest. A few
years ago, URI estimated the cost of deferred maintenance on their campus to be
over $400 million, not so much less than a year’s budget.
Category four is
excessive borrowing, and DOT has been a prime offender in the category,
and so have the colleges, creating fancy new buildings while cutting back on
the staff and projects that should be filling them. Governor Chafee has
proposed cutting back the DOT borrowing.
It’s probably the fifth
category that has seen the most exercise. In the drive to cut taxes on rich
people, the state has cut funding to: municipal governments and school
departments who have to make it up with property taxes; to colleges who have to
make it up with tuitions; to Medicaid recipients who have to make it up with
co-pays; to everyone who fishes, drives, or runs a hospital who have to make it
up with increased license fees, and to many more.
We’ve even taken it from
prisoners, for heaven’s sake, with parole fees, home confinement fees and
medical co-pays. Property tax payers, students, poor people, and prisoners have
paid for the tax cuts of the last 16 years.
One important point
about these categories, is that numbers three and four are only the illusion of
cutting costs, and generally make things more expensive in the long run.
And number five doesn’t cut costs at all, either. If you want an
explanation of why government in Rhode
Island is expensive, look here.
Let’s be clear: courage is not foisting costs off onto
others, nor is it insisting the state do its job badly. It is not borrowing to
hide shortfalls or pushing costs into the next year. Calling for efficiency is
laudable, but it is not courage, either. (Nor should it be confused with
actually finding efficiencies.)
Courage means honesty.
It means assessing with honesty our past policies, and not hiding behind some
claim that we have to wait and see the effect of tax cuts we’ve been waiting
for over a decade to see. It means honestly assessing claims that rose petals
will fall from the sky if only we can avoid asking rich people to pay their
fair share. It means honestly assessing what our state needs to do and finding
a fair way to raise all the revenue with which to do it. Honesty is hard, the
reason it’s equivalent to courage.
So listen skeptically
when you hear someone — a member of the legislature, an anti-tax activist, or a
friend — talking about making those tough choices. Are they talking about
categories two through five? Those aren’t tough, so don’t let them hide there.