Gubernatorial and legislative candidates are claiming that no tax increase will be necessary next year. They are correct. However, for them to be correct state expenses must be cut and that’s going to be a tough nut to crack.
Can it be done? Certainly. Will it be done? I doubt it. I think the Legislature will raise taxes and the governor, regardless of who wins the election, will sign the tax increase into law.
Why the glum outlook? My experience leads me to conclude that seriously attempting to cut expenses would be political suicide. Further, the bureaucracy would sabotage it. No state agency is going to willingly endure its budget being cut. The resulting loss of power and prestige would be intolerable.
So, are the state agencies then to blame for our elected representatives unwillingness to manage the public money? Not entirely. We the taxpayers must shoulder a significant amount of the blame.
Our expectations of government services have blossomed and continue to grow. Once a government agency extends it’s reach and begins providing a service, it has passed the point of no return. Our expectations are adjusted to demand that government keep doing the new thing and the agency is only too happy to oblige since its budget and headcount is increased. That agency then owns that service and will never willingly relinquish it nor do the beneficiaries of the new service wish them to. And around and around we go.
If we really want to manage government more prudently, we the citizens must give up some things. It’s clear to even the casual observer of state finances that our revenue will not support the expenditure demands placed on it. So to keep from raising taxes, some government services must go.
Sounds simple enough. But it’s not simple if it impacts us personally. All of us would probably agree with cutting government services that don’t directly benefit us. But we would vigorously object to giving up anything now provided to us by our government. Get the marbles out of someone else’s bag.
Maybe we’re ready to bite the bullet and do some serious budget balancing. Where could we start? The best approach would be to prioritize government services and start whacking away at the lowest priorities. Easier said than done. The financial hole that we find ourselves in is so deep that eliminating some government agencies entirely would not save enough money to put our financial house in order. We’ve got to go to where the big bucks are and do the cutting there.
Since I’m not running for office, it’s easy for me to speak my mind without undue concern for political correctness. I suggest that the Legislature has lowered the bar too low in setting qualifications for receiving Medicaid benefits. Now 25% of our state population qualifies for Medicaid. That’s too many people getting their health care provided at public expense. Raising the bar for Medicaid qualification, even just a little bit, would solve the state’s financial problems in one bold stroke.
The reason I chose Medicaid for an example is because that’s where the big money is going and if you want to solve a big financial problem, you’ve got to go to where the big money is. Another big expense that could be whittled and save big dollars is teacher pay. Now, there’s a political lightening rod if ever there was one!
Please don’t jump to the conclusion that I want our teachers paid less or poor folks going without health care. Neither is true. However, if we want to balance the state budget without a tax increase, these are the types of cuts that must be made.
Are our elected representatives brave enough to step up to the plate and solve the budget problem? I don’t think so and that’s why I think we’ll have a tax increase next year. Not just a tax increase, but a whopper of a tax increase.
Perhaps ending on a positive note would be appropriate. Perhaps this is not what everyone would consider a positive note. However, the next time a politician proposes expanding the role of government remember that it’s an irreversible course of action. And every time we accept more help from government, we give up a piece of our independence. Just saying “no” to government growth beats trying to pay for all of our past “yeses.”
Thought for the Moment — The income tax has made liars out of more Americans than golf. — Will Rogers (1879-1935)
Joe D. Jones, CPA, is publisher of the Mississippi Business Journal. Contact him at email@example.com.