How State and Local Government Spends Your Money
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When government takes money, it does so a little bit per taxpayer. When it spends money, it does so a lot per recipient. That’s why those who govern always find it easier to raise taxes than slow the rate of increase in government spending – there’s less complaining.
A rarity in the debate is an actual list of places to cut spending. Such a list was released this week over at the Nevada Policy Research Institute. Here it is.
Nevada’s State Archivist Guy Rocha made the front page of the newspaper with news of his retirement. He offered, in addition to his usual ability to fascinate with his command of Nevada history, some political views. For example:
“I find it disturbing this state that has essentially been my life is, in my opinion, on the brink of disaster. You can’t cut 34 percent or more without devastating state government”… Rocha fears legislators in the coming session will cut state spending so severely that it might take decades for his and other agencies to recover.
This is a little melodramatic. The latest estimates of Nevada’s tax revenue for the next two years is that state tax revenues will be about this same for the two years starting July 1, 2007 as it was for the two years starting July 1, 2005, and that it will be about the same for the two years starting July 1, 2009. Our flat revenue is much higher than revenue was for the two years starting July 1, 2003, and that number was swollen with the largest tax hikes in many decades passed by the 2003 Legislature. Later, Rocha notes he was a history major.
Rocha parts with this:
Rocha also criticized the state’s tax structure, saying it relies too much on tourist-generated revenues and leads to wild swings in the state’s financial health.
“We need a 21st-century Nevada, and it can’t rely on tourism to keep driving the engine,” Rocha said. “Tourism will no longer be able to sustain state government unless people are satisfied with a government so small it can’t do very much at all.”
All the available evidence indicates that our ability to export taxes to visitors has led to greater tax structure stability for Nevada, rather than wild swings. The current economic downturn (the private sector is down and losing jobs while the public sector is flat and not losing jobs) started with the “locals” economy of residential construction, and for many months tourism continued to do well, and the 2001 downturn was much less severe in Nevada than most states due to how quickly tourism rebounded.
Although Henderson elected officials complained of cutting budgets just last week, this week they were flush enough to expand their already-expansive legislative lobbying effort by a quarter-million dollars.
Local governments in Nevada spend lavishly to lobby the legislature.
Prior to the 1980’s, the Nevada Legislature approached spending with a measured, responsible eye. Over a couple of years back then, it converted to push hard for more and more spending every session. This attitude was not a function of Nevada’s growth rate, which has run at a constant rate since the 1960s.
During the late 80s and early 90s, the Legislature’s zeal to spend led to an embarrassing series of “budget cuts” caused by the Legislature’s aggressive forecasts of revenue. They planned unrealistic increases in revenue, then planned to spend it, then found themselves having to “cut the budget” back down to fit the actual increases in revenue.
This led to the creation of the “Economic Forum” in 1993 – an independent group that is supposed to forecast revenue without the political addictions to spending that tormented legislative leadership.
Here is the economic forum’s website.
At the close of the 2007 Legislature, the forum was forecasting state tax revenue to be $6.8-billion for the two years starting July 1, 2007. Last week, they estimated state tax revenue will be $5.7-billion for the next biennium, a reduction of $1.1-billion or 16%.
Remember, these dollar figures and percentages are measured over two year periods.
The Economic Forum will make their final forecast for the next biennium at the beginning of May 2009; this will be the “final answer” to which legislators will adjust their spending budget for the next biennium.
The Nevada Legislature reduced their plans to increase spending by $73-million dollars, but squeezed savings accounts and borrowed money in order to increase spending by another $267-million dollars during a special session Monday.
Here’s coverage from the Review Journal.
When a Nevada political leader tells you that we’re facing 30% budget cuts, you can be sure that they are an employee, contractor or other direct beneficiary of government spending. Because it’s just not true.
Here’s a great post from NPRI showing the reality of Nevada’s taxes, including the latest projection:
|
YEAR |
2004 |
2005 |
2006 |
2007 |
2008 |
2009 |
|
% Change |
31.7% |
14.1% |
11.5% |
2.8% |
-2.9% |
-9.1% |
Nevada News Bureau