State can’t afford new programs

Projections that lawmakers will have nearly $1 billion in new revenue to spend next year set all sorts of visions a-twirling through the heads of the government class – from restoring recession-emaciated budgets to showering voters and campaign donors with tax cuts.

But while $900 million is a lot of money to anyone outside of Washington or Wall Street, the way our state’s budget is crafted means it won’t go nearly as far as we’d like to think. Worse, it will become a tool to dig our state even deeper in a hole if lawmakers fall into their usual behaviors – treating one-time money as if it’ll be around in following years to pay for new programs it was used to create, or pretending that the money is a windfall and handing it out to taxpayers in the form or either one-time tax rebates or (worse) permanent tax cuts.

Having $900 million in “new” revenue doesn’t mean $900 million more than legislators spent last year.

Less than $400 million of it is new recurring money – additional tax revenue that will be generated by a slowly improving economy and growing population. This is the normal growth that allows government spending to keep pace with inflation, year in and year out. The other $519 million of new money is nonrecurring, or one-time money, mostly a result of economists having made overly conservative projections about how much money the state would collect last year and this year.

More to the point, the current budget includes nearly $600 million in nonrecurring money, which won’t be available to spend next year. Since much of that was spent to pay for operational costs, lawmakers would have to spend two-thirds of all the new money next year just to keep funding at its current level. And the combined effect of inflation and population growth means that they’d have to devote the rest of the new money just to keeping government operations at their current level.

It’s true that much of last year’s non-recurring money was spent unwisely – bailing out deadbeat companies, rather than requiring them to pay their fair share for unemployment insurance leaps to mind. And that means we’d be better off if lawmakers didn’t replace all of last year’s one-time money. For that matter, there’s no good reason to think that they spent recurring funds in the best way last year. The best results come from writing a budget from scratch, deciding just what it is we need to do as a state and how much it will cost to do it well, and then spending the money to accomplish that, rather than building on (or subtracting from) the current year’s budget.

Unfortunately, that’s a massive undertaking that probably couldn’t be accomplished in a single year, and besides, lawmakers have shown, year after year, that they have absolutely no appetite for that. So the best we can hope for is that they do no more harm.

What does that mean? It’s pretty simple, really.

Don’t use the $500 million in one-time money to create new programs or hire new employees or give any agencies more money than they received this year; the only time it makes sense to use one-time money to pay operational costs is when that money serves as a stop-gap, to delay making additional cuts.

Similarly, don’t use one-time money to pay for permanent tax cuts; that creates the same budgetary problem as using it for new programs or hires.

For that matter, don’t use one-time money for one-time tax rebates. Although that doesn’t affect the following year’s budget, there’s simply no justification for yet more tax cuts. By any number of measures, we pay some of the lowest taxes in the nation, and we can’t deliver adequately on basic services. You can make a respectable argument that in this economy, we shouldn’t raise taxes, but you cannot make a respectable argument for net tax cuts.

The temptations to do harm with the allocation of the $400 million in new recurring funds are different, but just as dangerous. Lawmakers mustn’t assume that the best way to use this money is to fill in gaps left behind when they paid for operations with all that one-time money. Some of that money should be replaced; some should not.

Nor should they use it for permanent tax cuts. Again, although some specific taxes are too high, our overall tax burden is not. What’s high is our failure to care for the mentally ill and keep our highways safe and keep college within reach of our students and keep enough good teachers in the classroom and meet a host of other basic obligations.

The challenge that is always there but rarely met is to use our state’s extremely limited resources to provide the services that are most important to meeting the needs of our state today and preparing us for a better future. The particular challenge this year is for legislators to wrap their heads around the fact that $900 million in new money isn’t enough for them to go on spending or tax-cutting sprees.

Contact Scoppe, a columnist for The (Columbia) State, at cscoppe@thestate.com.