I have chosen not to comment on this year’s budget discussions to this point because I was thinking what is the point? Very few people listen, and those that do have already made up their minds.  I have grown frustrated, however, at the lack of information presented in the debates on the budget, and since more information is better than less, I figured what the heck? Maybe somebody will get something from this comment.

I joined the Legislature in 1992, in middle of a budget debacle.  Total general fund spending in the 1991-92 budget, which was in effect when I took office: $42.1 billion.  The problem was that the spending plan called for approximately $46 billion in spending, and supposedly had a tax increase of $7 billion to cover the revenue "shortfall" (as they call it in government, as opposed to referring to it as it really is a "spending splurge").  Net effect of the tax increase, revenues fell in the 1992-93 budget from $42.1 billion to $40.9 billion as spending kept going up.  Democrats called for another tax increase to cover this out of control spending.  Republicans stood strong to allow the 1991 tax increase to roll off in 1994.  Result: from 1994 to 1998, revenues rose from $42 billion to $57 billion.  Government spent every dime of that increase, a 40 per cent increase from 1991 through 1998.

But that wasn’t all.  Taxes were cut again at the insistence of Republicans in 1996, 1997, and the car tax was cut in 1998, and the result? Revenues rose every year, from about $47 billion general fund in 1996-97 to $78 billion general fund in 2000-2001, a 65 per cent increase from 1996, and a 100 per cent increase from the 1990-91 budget.  Government spent every dime of that money.  In the 2001-02 budget, a sales tax trigger resulted in a sales tax increase.  The result? an $11 billion drop in revenue, as the economy slowed down.  The tax increase resulted in falling revenue.  The Democrats response? Raise taxes again.  Republicans held firm.  Spending was cut, and by the 2004-05 budget, revenues once again exploded, mainly as a result of the tax cuts at the federal level.  Revenue went from $66 billion general fund in 2001-02 to $97 billion general fund in 2006-07, and 33 per cent increase.  If you count from 1990-91, the increase in revenue was almost 200 per cent.  Government spent every dime.

In the last two years, revenue has still risen, from $97 billion to about $105 billion.  Government spending has increased even faster.  Our Democrat friends contend, just as they have every other time, that the problem is revenue.  In the last 15 years, real spending, on a per capita basis, adjusted for inflation, has gone up over 30 per cent.  Government services have gotten worse, government salaries have skyrocketed, government employee benefits have exploded and government employee unions have literally taken over the levers of government at all levels.  The only solution for these "pigs" at the government "trough" is more "slop" at the expense of private sector.  Just like the king in the old fable, they want to kill the goose that is laying their golden eggs to get more gold.  Unfortunately, some Republicans (mainly in the Governor’s office) are listening to this garbage because that is the only way, they think, that we can "get a budget deal."

The Governor got himself in this mess in the pursuit of a "budget deal" in the 2005-06 and 2006-07 budget.  The most foolish thing to do at this point is to exalt a so-called "deal" over the substance of the outcome of that deal.  Any "deal" that raises taxes will repeat the mistake of the 1991-92 budget, and ignore the history of the mid-90’s tax cuts, which resulted in record revenue increases.  Republicans resisted tax increases, and helped pull the state out of the crisis in the early part of this decade with tax cuts in Washington.  Democrats squandered that Republican created wealth with their spendthrift ways, and are now bleating for more "revenue" to continue their foolish patterns.  If Republicans ignore the history of Democrat budget failures, they will soon find themselves in a deeper, more pervasive budget morass.  It is no longer a debate, tax increases decrease revenue; tax cuts increase revenue.  That is history.  We should study it, so we don’t repeat the mistakes of the past.

This entry was posted on Friday, August 1st, 2008 at 12:00 am and is filed under Blog Posts.