State Taking Over Social Services? That's Not Tax Relief

During his budget address earlier this week Governor Jack Dalrymple proposed a state take over of local social service spending.

This isn’t a new idea. The Legislature actually authorized the counties taking over social services back in the 1980’s when the state was broke. Last session the state House defeated the bill –  HB1233 – on a relatively narrow 41-49 vote.

Today the mill levy for social services represents about $52.4 million in revenues around the state (that number from 2013 per the Tax Commissioner’s Office).

Already, proponents of the plan are talking about it as though it were tax relief, per this in-depth profile of the issue by Mike Nowatzki:

Cass County Auditor Mike Montplaisir said the governor’s proposal for 2015-17 would cut about 4 mills from the county’s 60-mill levy, which would save the owner of a $100,000 home $18 annually.

The savings would increase to $90 annually if the governor’s plan for the state to start reimbursing counties for the entire 20-mill social services levy in 2017-19 materializes.

“So it’s not a huge savings, but we’ve always felt those costs don’t relate well to property, so why should property tax payers pay them,” Montplaisir said.

Lawmakers I’ve spoken to who oppose this move say they are weary of tax relief plans that include air-lifting local spending into the state budget. The state is now spending hundreds of millions of dollars per biennium in a permanent buydown of local schools pending. These lawmakers worry about what will happen when the state is no longer seeing double-digit increases in revenues thanks to booming energy industry activity.

If revenues fall, these new obligations to local spending will have to be paid for out of state tax revenues. It’s easy now to hide these obligations in revenue surpluses. They may become much more apparent in the future should revenues fall, and the income tax or sales tax have to be raised to cover them.

Which brings me to my point: Maybe it makes no sense for locals to pay for social services. Maybe it makes a lot more sense for the state to handle those budgets. But if that’s the case, then let’s also administer these programs and department through the state (if the state pays, the state controls) and let’s stop calling it tax relief.

Shifting local spending to the state budget doesn’t lower tax burdens. It just changes the way taxpayer carry the burden.