Tuesday, August 4, 2009

So If We Balanced the Budget, Then What's Up With All the Program Cuts?

From Off the Kuff:
In addition to billions of stimulus dollars, the budget this year relied on some old tricks to get certified as balanced.

Nearly $3.7 billion in levies collected for everything from fighting air pollution to helping low-income people with their electric bills to funding trauma care will instead help balance the state’s upcoming two-year budget.

The money, for the most part, is collected through fees and fines that legally are dedicated for a particular purpose. If lawmakers do not spend the money on the dedicated purposes, however, the balances become available to spend on other programs.

“It’s kind of like having your (household) budget laid out and spending part of your food money on entertainment, or vice versa,” said Dale Craymer, chief economist of the Texas Taxpayers and Research Association, who has worked for a state comptroller, two governors and as the Texas House fiscal analyst. “It’s a backdoor way to undedicate the money.”

It’s pretty much the same thing every two years. We have a bunch of dedicated funds, which levy fees on certain things that are supposed to pay for certain specific items, then for a variety of reasons we decide to use some of that money for other things. It would be more honest to dedicate the money to general revenue, and it would be fairer to admit that we do this sort of thing because we refuse to adequately fund the things we want to pay for via the taxes we already collect and to deal with that, but we don’t. And so the shell game keeps getting played.

In some cases, unspent balances in dedicated accounts have grown to hundreds of millions of dollars over years.

For example, the System Benefit Fund has accrued more than $670 million. The program imposes a fee on electricity customers in competitive retail markets, including Houston, Dallas-Fort Worth and most of the Rio Grande Valley, to provide a May-September discount for low-income customers.


“We’re generating funds for a good purpose. We’re diverting the funds, without telling people, for general purposes. And then we say we’re not taxing. Well, government is lying,” said Rep. Sylvester Turner, D-Houston, who called such levies amount to “a tax by misrepresentation.”

Turner is a big advocate of the System Benefit Fund, which he tried but failed to restore full funding to in 2007. Especially in a summer like this one, it would have been nice for there to be help available for folks who can’t afford their utility bills, but as has often been the case, it wasn’t a priority.

Senate Finance Committee Chairman Steve Ogden, R-Bryan, said he understands the argument, but “if you are going to criticize that, then go tell me what other parts of the budget I’m supposed to cut. … The choice to complain about it is just hot air.”

Alternatives, he said, would be raising general taxes or dipping into the state savings account known as the rainy day fund, which budget-writers expect to need in the future.

“The long and short of it is, we have to do this in order to balance the budget,” Ogden said. “I guess this was the least objectionable of the four alternatives.”

The situation points up a major public policy issue, he said.

“Our tax and revenue system is pretty messed up, and a case can certainly be made for a major overhaul of our tax structure,” Ogden said.

I would have argued that the rainy day fund was the right way to go, as I was arguing for the budget in general before the stimulus funds saved the day. But Sen. Ogden is correct that our system is broken and needs fixing. He’s not the guy I want fixing it, mind you, but he’s right about the problem. As with many other things, that isn’t going to happen until we get a change not just in leadership but in our philosophy of governing. I can’t say I see that happening any time soon.

So how is Texas supposedly spending the Stimulus Money? Click here to find out.

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