Say Anything Blog

I just posted on the George Soros funded group who came out against North Dakota Measure 2 which would give North Dakota taxpayers a 50% income tax cut.  My point there was that the Fargo Forum covered up just who it was coming up with this “study”.  I had another point that needs to be made and I thought it deserved it’s own post.

Part of the tactics of the opponents of measure 2 is saying that if we give the money back to the taxpayers we’ll be in a lot of trouble when the oil booms end.  In fact this Soros funded screed said much the same thing, but it’s the same that John Hoeven has said as well.

“When the current economic boom ends, the loss of such a magnitude of revenue is likely to undermine funding for schools, infrastructure and public services,” he said.

I’ve been asking all along what’s riskier, reducing the tax burden now or spending the money.  If we spend the money we’re going to have a LOT more problems later if and when the oil boom ends.  You don’t have to take my word for it.  You don’t have to look what’s happened in other states.  All you have to do is to look at the mistakes that happened in North Dakota during the last boom/bust cycle.

Oil boomed in the late 1970’s.  In 1980 the North Dakota tax payers enacted an new oil severance tax of which an important part was creating the Permanent Oil Tax Trust Fund.  And what happened?

I’m going in part by my memory here but I do have the history of the sales tax to help me along. If I got something wrong I’d appreciate a correction. 

At the time the oil tax started coming in the sales tax rate was a low 3%.  The oil money started flowing in and the legislature and governor got wild.  The budgets passed in 1981 and 1983 had huge increases.  Just like we’re seeing today.  On the other hand taxpayers didn’t see significant tax relief, just like we’re seeing today.  As a historical note back then the Democrats had the majority in one if not two of the houses in the legislature while the Governor was a Republican.  What’s the excuse for the Republicans today?

So of course the oil busted.  Revenues went down.  Rather than roll back spending to previous sustainable levels the legislature decided they were going to stick it to the taxpayer.  In 1983 the legislature raised the sales tax from 3% to 4%.  In 1985 the tax base was broadened to include candy and soda pop.  In 1986 a special legislative session raised the sales tax from 4% to 5%.  In 1987 the legislature raised the sales tax from 5% to 5.5%.  In 1989 the legislature raised the sales tax again from 5.5% to 6%.  I think at this time they also stuck us with a significant income tax increase.

In December 1989 the public struck back, repealing by popular vote six or seven taxes lowering the sales tax to 5% as well as repealing the income tax increases and a number of other tax measures.  Incidentally the doom and gloom predictions of the irresponsible pro-tax crowd never materialized. 

It’s my contention that the riskiest course of action is to just spend the money.  Rather than enact significant tax relief Governor Hoeven and the Republicans increased spending 23% in 2007.  This governor doesn’t give a darn about anyone except for public employees.  Rather than give the money back to us, he’d rather give huge increases in spending to the public employees.

And what’s going to happen when the oil slows down.  Are these state agencies going to ask for less money?  Are the local school districts going to roll back their hyperinflationary spending?  Hoeven has increased the state employee count by 20% without any increases in services.  Is he going to cut back on the state workforce?

Of course not, just like in the 80’s it will be up to the taxpayers to keep the money coming in.  We can’t expect state workers to cut back.  No it’s up to the people working in the private sector to make the sacrifices. 

Why is it that the state legislature increased spending by $667 per person last year but could only afford to give my family a couple hundred dollars in a temporary tax credit scheme? 

Governor Hoeven and his cronies have their priorities all wrong.