Morris: When Will the State Quit Taxing?
by Leo Morris
Today’s entry for the “juxtaposition is everything” file:
- Indiana lawmakers working on the new state budget have learned that they will have $1.5 billion more to spend than previous revenue forecasts predicted. The state ended fiscal year 2022 with about a $6.1 billion surplus, the so-called “rainy day” fund.
- Both the Indiana House and Senate have passed mental health legislation that would cost about $225 million over two years, down from Gov. Holcomb’s request for a $347 million program. There is talk of funding the plan through an increase in the cigarette tax or addition of a fee to cell phone bills.
Well, now, that ought to get taxpayers’ attention. The state is in a healthy financial position, yet is trying to decide on a new tax to fund a new program. And please don’t get sidetracked by semantics. A fee is just another name for a tax.
Yes, I know all the reasons to downplay the state’s fiscal health. It got a big infusion of Covid-related cash. Surplus funds should not be used to start programs that will have ongoing yearly costs. A “rainy day” fund is just that – a recession could be just around the corner, and then we’d need it. Blah, blah, blah.
But, come on.
At some point, a fiscal unit (like a state) needs to take a long look at its funding priorities beyond “add something here” and “take away something there” based on the loudest voices among constituents and lobbyists. What should get the top priority? What can be dropped? What are our long-term needs, and what short-term emergencies should we prepare for? Are all areas of the state being served equally well?
At the very least, the state could fund the biennial needs for mental health – and for the next biennium, too, for that matter – from the rainy day fund without making a serious dent in the surplus. That would give it two to four years to decide where mental health funding should fit in with the state’s overall needs and what new funding sources, if any, are needed.
And the best time for such an overall look at the state’s budgeting needs is, guess when? Now, when our fiscal house is in order and we can make calm, reasonable decisions. Not when we are in financial trouble and prone to make panic-driven bad decisions.
Just consider the federal government.
Its finances are an unholy mess. The national debt is $31 trillion and climbing, and that doesn’t even include looming unfunded liabilities for Social Security, Medicare and Medicaid. The budgeting “process” involves veering from crisis to crisis as yet another “raise the debt ceiling or risk default” moment arrives. About half the population already pays no federal income taxes, and the number of people expecting more from the government than they give grows and grows.
The more the government obligates itself to, the less discretionary funding it has. (There is already worry, for example, that we have committed so much military might to the Ukraine that if China decided to invade Taiwan, we would not have the ability to defend it.) The government continues on its wobblily way with more borrowing and more printing of money, which just adds to the inflation that creates the cruelest kind of tax on Americans.
And on and on, an endless nightmare with doom just around the corner. Does anyone expect our legislators, in such an atmosphere, to sit down and calmly assess its taxing-and-spending priorities? A few years ago, Sen. Rand Paul tried to get a (very modest) 1 percent spending cut for five years passed and was soundly rebuffed.
So I don’t think it is too much to ask for our state, with its modest little budget, to take steps now, in the middle of our relative prosperity, to make sure its financial house stays in order. The legislators are fond of summer study committees. Might I humbly suggest this as a topic for one of them.
Let’s close with another juxtaposition:
- For fiscal year 2021, the total expenditure of all 50 state governments combined was about $2.1 trillion.
- For the same year, the federal deficit was $2.8 trillion.
Leo Morris, columnist for The Indiana Policy Review, is winner of the Hoosier Press Association’s award for Best Editorial Writer. Morris, as opinion editor of the Fort Wayne News-Sentinel, was named a finalist in editorial writing by the Pulitzer Prize committee. Contact him at firstname.lastname@example.org.