As I See It

by

Published: April 7,2003

Mississippi legislators have wrapped up another session in Jackson, and they’ve gone home to focus on a more pressing issue: getting re-elected.

Considering the woeful shape that the state’s finances are in, one would think that the subject of raising taxes would have been discussed during the session. But nary a word was heard. In fact, one legislative leader was quoted as saying that a tax increase wasn’t in his vocabulary.

My guess is that legislators’ vocabularies will expand to include tax increases — right after the upcoming election. We will hear the typical cries that the state budget can’t be cut any more and still maintain basic services to the people.

Poppycock!

We need to put an end to this thinking before it gets started. Money is so easy to spend and so hard to save. All of us know that. Government spends in anticipation of future revenue increases and finds itself in the ditch if the expected increases don’t materialize. And the financial ditch is just where most states, including Mississippi, now find themselves.

Although government doesn’t have as much influence on the economy as bureaucrats would like to believe, they do enjoy the fruits of increased revenue when economic times are good. Nothing wrong with that as long as adjustment is made when the going gets rough. Therein lies the problem.

The 1990s were extraordinarily good years for the American economy, and state governments benefited from the rising tide.

In Mississippi we enjoyed an additional tax revenue surge with the arrival of legalized gaming. The problem is that government factored ever-increasing revenue into its spending formulas and didn’t quit its spending rampage several years ago when it became obvious that the economy was slowing down. The kindhearted might say our state spending got out of control. The more base among us would say the Legislature spent money like a drunken sailor.

It is of no benefit to criticize what has gone on in the past. The fact is we must cut state spending in a big way in order to get things under control. The biggest cost in state government is salary expense, and we must cut the state payroll if we are going to balance the books without a tax increase. Politicians would rather have their fingernails pulled out than fire state employees, but there is no other way to reach solvency.

Largely ineffective attempts will be made to put bandages on the problem and say that is all that can be done. A tax increase is necessary to keep the state from fiscal disintegration. Don’t believe it! What is going to be required is some real leadership in prioritizing state expenditures. Some programs are nice to have, but not essential to providing basic government services. It’s time for those programs and the staffs that administer them to go.

I’m reminded of the hue and cry that arose several weeks ago when our Medicaid director, Rica Lewis-Peyton, proposed saving the state big bucks by utilizing a mail-order prescription drug company to provide drugs to Medicaid beneficiaries. Several legislators pinioned her for suggesting a move that would reduce profits to many pharmacies in the state. Her response was that she was not trying to harm the pharmacies, but her charge was to reduce Medicaid cost. Now there’s a government employee who’s on the right track!

I share her feelings that pharmacies are important elements of our business community; however, the state is not in the business of insuring profits to private enterprises. That brings to mind an important point. If the state is to cut expenses, somebody is going to get less government money after the cut than they got before and they are going to be mad. Likewise, some government employees will lose their jobs as the result of serious budget cutting. I hate to see anyone lose his or her job; however, the welfare of the state is more important than the job security of any state employee.

Why not raise taxes? Who will notice a little bump here and there? Raising taxes sends a message that we don’t want to send. It says that we are unwilling to manage our public money and our politicians take the easy way out. When taxes are raised, businesses often leave and take jobs with them, creating a greater long-term problem for everyone. Additionally, our state becomes less attractive for prospective new businesses and they will take their jobs elsewhere.

We should never lose sight of the fact that government is a consumer and not a generator of wealth. By way of example, if everyone worked for the government there would be no economy and no tax revenues. We must depend on the wealth-generating activities of private businesses to create an economy from which government derives its tax revenue.

Killing the golden goose is a great short-term fix, but it destroys the future. A tax increase would be tantamount to killing the golden goose. I won’t sit quietly by and watch the carnage without squeaking like a rusty hinge. I invite you to join me.

Thought for the Moment — But if serving the Lord seems undesirable to you, then choose for yourselves this day whom you will serve….But as for me and my household, we will serve the Lord. — Joshua 24:15

Joe D. Jones, CPA, is publisher of the Mississippi Business Journal. Contact him at cpajones@msbusiness.com.

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