Josh Boschee Is Wrong: North Dakota Has A Spending Problem, Not A Revenue Problem

According to state Rep. Josh Boschee, a first-term Democrat who just announced his re-election bid in District 44, Republicans are to blame for revenue shortfalls and the resulting budget allotments announced by Governor Jack Dalrymple because they cut taxes too much. He says as much in a letter to the editor published in the Fargo Forum over the weekend:

Rewind to 2008, North Dakotans overwhelmingly rejected a ballot initiative to reduce individual and corporate income taxes. In District 44 alone, 74 percent of voters rejected the income tax cuts! However, during the past four legislative sessions, the Republican supermajority ignored the voters’ wishes and gradually reduced income taxes to a rate further below what the 2008 ballot initiative would have established.

These Republican-led, budget-gutting legislative actions have significantly led to what is now a $1.1 billion reduction in revenue – revenue that would have provided stability for mental and behavioral health services, early childhood education and law enforcement.

There are a couple of problems with Boschee’s partisan attack.

First, can it really be said that North Dakota’s current budget cuts are the result of a revenue problem? Sure, we’ve all seen the headlines about a revenue shortfall, but it’s worth keeping in mind that revenues fell short of a forecast for the 2015-2017 biennium which, I think most will agree now, was a bit too rosy.

If we compare actual revenues in the 2015-2017 biennium to date with previous bienniums (as I did in a post earlier today) we can see that a) the actual general revenue decline so far has been just 0.2 percent and b) revenues are still way, way above where they were just a few years ago:

That doesn’t look like a revenue problem to me. Rather, I think North Dakota has a spending problem. With a tidal wave of boom-time revenues flowing into state coffers over the last several years lawmakers didn’t say “no” to appropriation requests very often. Since the 2005-2007 biennium to the pre-allotment 2015-2017 budget, the state has been averaging – again, averaging – a 36.8 percent biennium-over-biennium increase in general fund spending. Now they’re having to back off those big spending increases (note the tiny change resulting from the allotments Rep. Boschee is all worked up about):

There is still plenty of room for criticism of Republicans in this fiscal picture. They held both houses of the Legislature and the governor’s seat during this time, and they simply grew spending too fast. We’d have less of a problem today if they’d been more restrained with spending growth in previous bienniums.

But why isn’t a rank partisan political opportunist like Boschee attacking Republicans for spending? Why is he talking about the modest tax cuts passed by the Legislature instead?

Because he knows Democrats wanted to grow spending even faster. As I wrote in my newspaper column earlier this month:

…Democrats wanted more spending and less saving.

“You definitely want to have a budget cushion” Senate Minority Leader Mac Schneider, a Democrat from Grand Forks, told the Bismarck Tribune in 2013 of the state’s reserves funds. “(But) I don’t think we need to fill our pockets with cash at the expense of addressing needs.”

The Republican majority has been behaving like a bunch of spendthrifts, sure, but even as they put the pedal to the metal on spending increases the Democrats want to accelerate them even faster.

An inconvenient truth for Boschee, which is why he is to invent a narrative about tax cuts being the root of North Dakota’s budget issues.