February 18, 2009

 

Neither Budget Repair Nor Stimulus

With the current state budget limping toward its June 30th expiration date $600 million in the hole, the Governor was obligated to balance the books by the end of the fiscal year.  Working only with Democrats behind closed doors, the Governor cooked up a bill he deemed one part budget bailout and one part “economic stimulus” package.*  The 389-page proposal was then rammed through the legislature in 48 hours.  (I voted against it.)

As a budget repair bill, it misses the mark by covering only $183 million of the $600 million deficit.

As a so-called economic stimulus, it’s even worse.  An iron law of economics is that taxing a good or service discourages its creation or use.  This proposal includes an 11% business tax hike, a new sales tax on digital products (aka: the iPod tax on music downloads), new sales taxes on items that have traditionally been tax-exempt and a new tax on hospitals.  The Democrats justify their new tax ideas with euphemisms like “tax fairness,” “closing loopholes,” and “streamlined sales and use taxes.”  Whatever you call it, higher taxes on our biggest job providers, hospital customers and the general public has the exact opposite effect of stimulating the economy.

*Note: The state version of the so-called stimulus bill should not be confused with the $790 billion federal version of the so-called stimulus bill just signed into law by the President.  For more information on that bill, please visit here: http://sensenbrenner.house.gov/News/DocumentSingle.aspx?DocumentID=111549

And here: http://www.house.gov/ryan/speeches_and_editorials/2009speechesandeditorials/21309RJTblog.htm

 

Second Verse, Same as the First…

Less than a week after proposing $1.2 billion in new taxes in his budget "repair" bill, the Governor last night unveiled his spending bill for the next two years.  Although I'm continuing to dive into the details of this bill, it's clear that the Governor is committed to even bigger tax hikes to balance this budget.

Among other things, the budget the Governor introduced last night would increase the tax on capital gains, high income earners, cigarettes, gas taxes (by up to 7 cents a gallon) and it opens the door to higher sales taxes to fund regional transit programs.

Instead of trying to raise more money with new tax hikes, the state ought to recommit to spending the money it already takes in more wisely by reforming spending, rooting out waste and eliminating ineffective programs.  Instead of plowing ahead with several new government programs, we ought to just say no to new spending commitments.