Say Anything Blog

Last year a lot of state governments here in America were flush with cash.  Strong economic growth had been good for tax receipts, and state coffers were full of money.  So full, in fact, that the states were begging the federal government to let them spend more of their money on programs such as SCHIP.  Now, after a year of economic downturn, tax receipts aren’t as hot as they used to be.  States that increased their spending during flush years are now facing deficits, and they’d like the federal government to bail them out.

First, let me say that state governments don’t deserve to be bailed out from their irresponsible spending and budgeting any more than the banks or the automakers deserve to be bailed out from their bad decisions.  Let them solve their budget woes on the local level by either cutting spending or raising taxes.  People in states that haven’t made a mess of their budgets don’t deserve to be on the hook for people in states that are in a bind.

Second, North Dakota could learn a lot from this.

Right now, North Dakota leaders are sitting on what will be over a billion dollars in surplus funds.  This is coming on top of a legislative session from two years ago that also saw a massive budget surplus.  In that session two years ago our state leaders essentially spent every penny of the surplus, growing the size and cost of government.  Every indication in the state right now points to a repeat performance.

In the short run the state can probably afford it.  The oil industry remains active in the state, and the tax receipts driven by that activity remains high.  But what happens when the economic slow down the rest of the country not bolstered by the energy industry is facing hits North Dakota?  With oil prices sagging that may happen sooner rather than later, and when tax receipts fall will we be able to afford all this additional spending our state political leaders have been doing?

Common sense would tell us that now is the time to stop spending and give that money back to the taxpayers to mitigate, and perhaps even stave off, economic stagnation.

Heck, we’re already seeing political leaders in the state looking for bailouts for their profligate spending.  Property taxes have become a huge problem in the state.  Taxpayers are on the verge of a revolt over them.  But rather than cutting back on spending, the local political leaders that actually levy the property taxes keep looking to statewide legislators for a bailout.  And Governor Hoeven seems all too happy to oblige with his property tax plan which would essentially buy up some of that overspending in exchange for local governments lowering their property taxes temporarily.

Again, that isn’t right.  The spending problems at the local level that are driving high property taxes should be solved at the local level.  Bailouts from the state level isn’t going to do anything but prop up that excessive spending and ensure that it remains a problem.