2016-04-06 / Editorial

TWO STATES’ SOLUTIONS

Michael N. Searles

"Give the people what they want" is a maxim that politicians have learned well. Listen to the words of most politicians and you are likely to also hear the phrase "massive governmental fraud and waste." Accordingly, the answer to our problems is not more tax dollars but, in making government operate more efficiently. A number of office holders have gone further and argued that government is over-taxing the people (especially the rich) and something needs to be done about it. Two states that deserve our attention have implemented deficit reduction and lower taxes. While other states could be cited, Louisiana and Kansas can be viewed as the canaries in the coal mine. Former Louisiana Republican Governor Bobby Jindal led Louisiana over a fiscal and political cliff. A list of critics lined up in universal condemnation. Robert Travis Scott, president of the nonpartisan Public Affairs Research Council in Baton Rouge, said he had never seen an income to expense cycle as desperate as the Louisiana’s budget shortfall that was projected to reach $1.6 billion and likely to remain in that area. While the fall in oil prices was a contributing component, Governor Jindal’s fiscal policy, endorsed by the state legislature, was a major factor. One, if not the major element in the crisis, was the governor’s refusal to seek new sources of revenue. This resulted in deep cuts to health care and higher education, the lack of funding from other sources, and a robust economic growth that never materialized. The Jindal administration cut $300 million from state support to colleges and universities which represented about $1 billion in higher education reductions. Jindal also cut another $200 million or so from health care. State agencies expected a 15 to 20 percent reduction in their budgets, which promised to trigger furloughs and reduced services. The governor was against raising taxes or eliminating tax credits that would help fill the budget defi- cit, causing ordinary citizens to pick up the slack with higher fees on many different items.

Republican Governor Sam Brownback of Kansas came into office promising supercharged economic growth, and with the support of the Republican state legislature made an economic leap of faith with deep tax cuts. Instead of skyrocketing prosperity, job growth in Kansas trails the nation. The state's rainyday fund is dwindling to zero. Month after month, revenue comes in even lower than fiscal officials' most dire expectations. The consensus opinion of both liberal and conservatives economists has been that slashing the two top individual income tax rates, corporate tax rates, and exempting all pass-through business income created the dismal state of the Kansas economy. Governor Brownback, a true believer, despite facing a massive revenue shortfall, defi- antly promised to continue the march toward zero income taxes even as his policy likely will keep billions out of state coffers in the coming years. Some states, while looking at Kansas as an example of what not to do, asked the question: How do you sustain funding for a top-quality school system when you don't have the tax dollars to do so?

It’s not known if other states are looking at the Louisiana and Kansas models, but many Louisiana and Kansas voters are experiencing buyer’s remorse. As Alexis De Tocqueville, author of Democracy in America once wrote, the last thing a political party gives up is its vocabulary. Ideas firmly implanted, such as "government always does an inferior job compared to private enterprise" and "the people always know best how to spend their money" have sustaining power among the public. While government does not always make wise decisions, the idea that government should not function or should be allowed to wither on the vine is both impractical and dangerous.

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