North Dakota Budget Surplus Way Ahead Of Projections

• March 9, 2006

Fantastic news…

BISMARCK – North Dakota’s strong economy has state government running a surplus of $107.2 million with barely a quarter of the two-year budget cycle gone, the state budget director said.
That represents 20.6 percent more funds than the 2005 Legislature projected for the July-through-January period. The biennium ends June 30, 2007.
“It is phenomenal,” Director Pam Sharp said Tuesday, on the eve of a formal report to legislators. “This is so telling about our economy.”

Republicans are saying that this means we won’t have to raise taxes.

House Majority Leader Rick Berg, R-Fargo, said the surplus means the state is “stable and we’re going to be able to sustain the programs we put in place” without a tax increase.
He said it gives state and local government agencies confidence that there won’t be a need for cutbacks during the biennium, such as were necessary several times in the past 20 years.

Honestly, I’d be a bit more encouraged if Berg had said that they were planning on cutting taxes to give some of this surplus back to North Dakotans. This is no time for our leaders to be sitting on their haunches. Things are going great in North Dakota, but to keep that momentum moving we need to keep stimulating the economy. Across-the-board tax cuts are just the ticket. If North Dakotans have more money in their pockets they’ll spend more in the state’s economy. That means more economic growth and more jobs for everybody.
Plus, as history has shown, when government cuts taxes tax receipts typically go up thanks to the increased economic activity those cuts foment. If done right, North Dakota’s government could be in the same surplus situation it is in now while taxing North Dakotans less.
Democrats, of course, make no secret about what they’d do with the money:

A Democratic-NPL legislative leader said the surplus is proof that the 2005 Legislature could have funded human service programs more adequately.

Leave it to the Democrats. Government has more money than it needs? Let’s spend it as though it belonged to us and not the citizens of North Dakota!
(via Taking Back ND)

Tags: North Dakota News

http://Array robert108

Robert: Govt is an expense to the taxpayers.  The moral thing(stewardship, if you will) is to give the taxpayers equivalent value in return.  Therefore, giving back the unused funds is a primary function of proper stewardship.  I didn’t say anything about getting a refund in the mail next week;  those are your words.  I didin’t consent to wasteful spending when I elected anyone.  If they had said that in their campaign promises, I wouldn’t have voted for them.  Remember Mondale and his promise to raise taxes?  I agreed to let the govt use my money for their stated purposes and in the stated quantity.  If they guessed wrong in either direction, that is their responsibility, not mine.  Again and again;  if your road project is that good, sell it to the public, appropriate the money and spend it responsibly.  The public should have the choice.  Inefficiency on the part of govt isn’t an excuse for overtaxation and not returning the overage.  It is stealing to do so, just like my supermarket example.  If the govt can’t give us good roads by legal means, maybe they should turn it over to the private sector in the form of toll roads.  Let the market decide, not the politicians.
robert108

Actually, IMO, it’s just the opposite.
robert108

michael w:  For my own peace of mind, I find it useful to regard the govt, in general, as our management company.  This is not entirely accurate, but close enough to be useful.  The govt has two vital functions, for which it should be appreciated:  national defense and maintaining a stable currency.  All the rest is done by us, the citizens.  If we regard the govt as our management company, some things come into focus.  They are an expense to us, and it is up to us to make sure the expense is justified.  This is about performance.  The public should examine every govt expense very closely, with performance in mind.  Social spending is my big bugaboo, since it doesn’t seem to be about any real benefit to anyone other than special interest groups, including vote-buying for politicians.  By and large, our govt is less corrupt than any other in the world, but that doesn’t mean we shouldn’t be monitoring them closely.
robert108

Robert: When the govt overtaxes us, the only ethical thing to do is to give it back. If they want to build such roads, then put that in the budget and let the people decide, through their elected representatives, to do so.  Otherwise, it’s stealing. 
robert108

Robert: If that project is such a great idea, why wait for a "surplus" to do it?  Bring it up as a regular project, budget for it, assess the taxes, and do it.  Why the "back door" approach?  Fat and lean years are a matter of govt spending, not anything else.  If the supermarket overcharges you for something, don’t you expect the money to be returned immediately?  Or do you accept that they use the money on needed improvements to the store, which will some day result in slightly lower prices?
michael w

Now that I think about it, it’s amazing how rhetoric my question was?  I knew the answer, but there is a part of me that thinks there should be this inherent common sense in someone especially if they are in the business of being a politician.
robert108

michael w: That is one hell of a question!  My take on it is that the incentives for the politicians are quite different for those of the rest of us.  Politicians derive their power from the amount of money in their budgets and from the number of employees they have.  Therefore, govt tends to become ever larger and to demand ever more money.  In other words, unlike the free market, govt isn’t self-regulating.  It is up to us, the citizens, to keep them in check.  Believing that they are "smart" or that they have our best interests in mind is just wrong.
robert108

michael w: Thanks!  Of course, I meant "reduce the tax rates", not "reduct".

If I budget $1000 for a sound system, and get it for $900, I have a "budget surplus".  I don’t have any more money than I did before, and I have spent $900, but I have a "surplus".  On the other hand, if I spend $1100, I have a "budget deficit".  When it’s my money, I have three choices: One, go into debt; Two, wait until I have the additional money, through saving, or Three, get cheaper stuff.  When I’m spending someone else’s money, it’s a whole different ballgame.  I have no incentive to keep to any budget, and I can go into debt without incurring any personal penalty.   
michael w

Robert108 is exactly right!
The.Whistler

Rather than cut taxes I’d suggest a tax rebate.  That way the government doesn’t grow to need the money in down years, but the tax rates remain where they are.

 
http://www.takingbacknd.com/ brenarlo

Anon,

You obviously don’t know much about economics.  If you got to my blog, you will have noticed that the state gets more money from sales taxes than they do anywhere else.  If some of that surplus money (some would call it overtaxed money) is given back to North Dakotan’s to spend, they’ll buy things, paying more sales taxes, buying bigger homes with more property taxes, and pretty soon businesses will be booming because of the extra business.  When their businesses expand, sales taxes go up again because they buy things.  It’s amazing how fast an economy can grow when the government gets out of the way. 

I agree with Rob that it may be time cut taxes.  The only part of me that maybe thinks we should wait a little while longer is because the federal government will probably keep making the states pay for their policies.  The ND rainy day fund might need to be a bit bigger…  but that’s my only concern.  Social programs and education spending doesn’t need to go up.  The money either needs to be in the rainy day fund or given back to the people. 
Robert Perry

Robert108, I would agree that deliberately taking more than is needed is a kind of theft, but one must have ways of dealing with the inherent variability of tax receipts, no? 

I’d suggest that a great way of doing so is "building to last" during the "fat" years and doing the minimum needed during "lean" years–and I’d suggest that getting the roads up to Roman standards might be a great way of doing so.  Over a period of a decade or so, one might get the roads ready for the next half-century. 

And again, as those "Roman roads" fail to wear out, we’d be in a position to greatly reduce taxes. 
Bat One

Typical Democrat, indeed.  The day a responsible leader on the left (oxymoron alert!) can suggest serious cuts on the spending side of the ledger, that’s the day that maybe, just maybe, the public wil start to take the Democrats seriously again.
michael w

Have you seen the movie ‘Dave’?  The thing I loved about that movie was the part where the fake President invited his accountant friend into the White House to balance the budget.  Using common sense, they were able to hammer out a balanced budget.  It’s a Hollywood dream right?  I don’t know.

There are very smart people working in government and that is on all sides of the aisle, politics aside.  How does your very sound reason not work in America’s current state of government? 
robert108

Robert: If govt expenditure followed all the economic rules of personal or business expenditures, your proposal would make sense, although your second reason is not sound.  They tell us about surpluses(which rarely happen) to make us think they are fiscally responsible, instead of admitting the truth, which is that they made a wrong projection.  The same reasoning applies to budget deficits, which are excessve spending.  The difference is that it isn’t their money, it’s ours.  If they were spending their personal money, there would be a balanced budget every year.  Since they are not, the supply/demand relationship no longer applies.  I think your mistake is in assuming govt spends oour money for our benefit.  Wrong.  Their primary motivation is to get re-elected, so they are constantly trying to make us think their spending is for our good, but the truth is that they spend money to buy votes. They are also motivated to make govt ever larger and more expensive, so the last thing they want to tell us is that they overtaxed us and are going to give the money back.  Instead, they sell us the idea that they have done something wonderful, and we should re-elect them for making an inaccurate budget proposal and have spent less of our money than they took from us.  "…many business executives do…"  This is only done in highly regulated businesses.  Firing productive employees costs a business money due to lost production, in general.  You don’t hire excess employees in the first place, because that is a bad management practice.  
Robert Perry

Robert108, I mostly agree with you, but simply suggest that three to five years or more is a better time schedule for planning, either in business or in government, than one year or less.  When we insist on tax cuts with a one-year surplus, we’re effectively doing the same thing as many business executives do when they fire 10,000 people to make the next quarter’s numbers look good. 

Even worse, if government knows they’re going to need to "give back" all of the higher revenue, they’re going to make sure that you don’t find out about a surplus–like giving it to the schools.  I’m just proposing that government might do well to employ a sound business plan instead–one that has the flexibility to last for ten years or so.  See what I’m getting at here?
michael w

Anon – That’s an asinine comment.  Each budget year money is put towards education and human services programs and they are being paid for.  This is no different then if I went to a store and paid $20 for a $15 item.  The store is going to give me my $5 back.  They don’t need it, the product was paid for.  Same thing.  Give me back my money.  You want to spend more, ask me, i’ll vote on it.  In the meantime I’m buying a new plasma TV.
robert108

Robert: I hear no good reasons from you that should entitle govt to steal from us.  You try to make equivalency between big govt and big business, but we have a choice whether or not to spend money for the products/services offered by a business, but when govt wants our money, it confiscates it and we have no choice at all.  If people stop coming into WalMart, it will eventually go out of business.  The govt never goes out of business, it just grows and grows, no matter what it does.  I don’t understand your argument about the profit motive and "the sin nature".  It is bad management practice to hire more workers than you need, so it’s not a sin to fire them if you made that mistake.  It’s just bad management.  You sound like a socialist who believes that the function of business is to give people jobs.  Nothing could be farther from the truth.
Robert Perry

Actually, I don’t trust either businessmen or government officials to make smart decisions–I’ll freely admit that I’m dreaming a bit here to think that one could use the natural fluctuations in revenue to get the long term projects done without having some scoundrel divert that revenue to his own pet project or bank account.

And yes, I implicate business leaders, having seen a series of moronic layoffs in the industry in which I work.  The profit motive does not override the sin nature.
Anon

Because spending money on human services programs and education that directcly benefit North Dakotans isn’t "giving it back to them"?
Robert Perry

I make no claim that government should steal from us.  However, I don’t think that retaining a temporary surplus for a genuine, long-term need constitutes theft. 

One might want to get consent, as is the case with Colorado’s Taxpayers’ Bill of Rights (TABOR), or one might get consent by "hiring" lawmakers who pledge to set up a reasonable long term budget structure–absorbing the temporary hills and valleys of tax revenues by advancing and delaying certain spending.

Either way, it’s legitimate government, not theft.

Now you and I both know that the tendency of politicians (and yes, executives) is to use a temporary surplus for their own pet projects–generally "fun" things like stadiums that really aren’t a role of government.  That’s what I would call "theft," not the timing of legitimate governmental functions to match tax revenues.

See what I’m getting at here?
robert108

Robert: You seem to hold the premise that our money belongs to the govt.  I don’t.  I think every govt expense should be justified on performance, and be with the consent of the governed.  I don’t believe in the "slush fund" mentality.  When they take too much, they should give it back, and when they spend too much, they should cut back their spending.  Anything else is dishonest.  I reiterate that if an expense is justified, like your road project idea, then pass the legislation, budget for it, and do it.  It must be done with the consent of the governed.  Your attempt to make an equivalence between govt spending and business executives is inaccurate, as I have pointed out.  Spending for the products and services of a business is voluntary on the part of the citizens, but taxation is not.  If we don’t like a business, we don’t spend any of our money with it, but if govt does things we don’t like, we pay anyway.  It’s a fundamental difference.  The only way to rein in the power of govt is to want less from them.  Failing that, we have to make them directly accountable as much as possible.  Spending our money as an afterthought is unacceptable in a free country.
robert108

Robert: One more thing. In your last paragraph you made an equivalence between a govt budget surplus and a profit earned by a business.  This is completely wrong.  They are not the same thing.  A profit is earned, and represents the proper supply and demand relationship in the market, but a govt surplus is overtaxation.  This smells like marxist economics to me.
Robert Perry

No, it’s just a matter of stewardship, as well as the fact that you consented to a certain level of taxation by electing the bums who set the tax rates.  The fact that the prediction gave more money to the state than expected does not make it "theft" when you don’t get a refund in the mail the next week.  You agreed to let the government use that money.

So again, it is a matter of stewardship.  It might be that North Dakota has all of its roads ready for the next 50 years, and that that state has no bonds to repay, and so on.  It might be a good time to repay excess tax revenues.

On the other hand, it’s probably more likely that a lot of roads are cracking because of a lack of funds 5 years ago, that there are a lot of bonds out there, and there are other long-term obligations that haven’t been met.  In that case, I’d encourage some of those roads to be fixed–and if possible WELL, like a Roman road, some of the bonds to be paid off, and so on. 
robert108

TW: First of all, a "budget surplus" isn’t extra money, it’s excessive taxation.  The only ethical thing to do is to return it to the taxpayers in the form of a rebate, and reduct the tax rates to prevent future "surpluses".  Cutting social spending is the real way to balance the budget and to decrease the burden of govt on the taxpayers.  Besides, if social programs worked, they would need less money every year, not more.
Robert Perry

I’m not usually a fan of keeping taxes the same when there is a surplus, but one possible way of dealing with periodic surpluses would be to make really good roads that year–say 3′ thick concrete & asphalt like they do in Europe’s highways. 

Then, when those roads last for 50 years (or 2000, like Roman roads have) or so, you’ve got a REAL surplus to give back to the taxpayers AND roads suitable for 100mph and higher.  The major expense of building roads is labor and capital, not material, after all.
geo

Well said Micheal. Got more money..spend more money. How about a little relief now?

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North Dakota Budget Surplus Way Ahead Of Projections

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