Budget Gaps
[My thanks to Jon for the invitation to blog at the Flashreport. The best thing about the blog format is the chance to have back-and-forth exchanges, so comments on my posts — and emails to me — are encouraged!]
The scare tactics being used to stampede everyone into higher taxes are amazing. By estimating expenditures without reductions and by extrapolating current revenues and then multiplying that by several years, it is possible to declare a budget deficit that is bigger than the budget. The scaremongers are not quite there yet, but they are close. Let’s define the problem.
Revenues were $101 billion dollars a year ago. Despite declines in the economy, state leaders stuck to this number even up to the September enactment of the 2008-09 budget. Now these same people are all shocked and amazed to announce that the revenue for this year will only be $91 billion. Governments are not very good to adjusting income downward (actually, no one likes doing this), but by my math that is roughly a 10% drop in revenues from the prior year. Since there are lots of ways to squeeze 10% out of government spending the simple solution would be to… Read More