Actually, It’s the Taxes, Stupid

Greg over at Espresso Pundit is on the Taxpayer Bill of Rights (TABOR) soapbox claiming that the current budget crunch in Arizona is not the result of the GOP majority constantly hacking away at our tax base and shifting it to more cyclical revenues (like sales tax, which is also more regressive), but due to run-away spending. Not only is the idea that spending is out of control in Arizona risible, but his favored solution, a TABOR in Arizona, is a simply the latest disastrously irresponsible idea from a party best known of late for its disastrous ideas and tragically poor judgment.

Here’s the neat-o graph Greg thinks proves something:

What we see here is actual Arizona state budgets (The blue line) compared to a TABOR-limited hypothetical budget limit (the green line with triangles) that caps state expenditure growth to population increase plus inflation. Greg thinks that this proves that a TABOR-limited budget would have imposed greater spending discipline.

He might be right that state government spending would be less, but TABORs tend merely to shift costs off the books, not to reduce overall governmental costs. Local governments, special taxing districts and mechanisms, and other accounting tricks are used to meet citizens real needs while producing the accounting targets the TABOR requires.

And what essentail services can’t be hidden from the reach of the TABOR’s meat axe are often just hacked into indiscriminately. Now, I suppose that’s fine for some conservatives… until and unless their own preferred state services are affected. How about we let a bunch of felons out of prison to save on incarceration costs? How about we stop building needed roads and other infrastructure, creating a massive investment deficit that will cripple our economy in the long-term? How about we under-invest in our schools and leave an entire generation without the skills to compete in a global economy?

Taxes are how a society invests in itself and accomplishes goals and functions no private citizen can. Conservatives seem to have forgotten that.

The main reason a TABOR is a poor substitute for a democratically responsive representative body making decisions about the public interest and providing the revenue to meet societies needs is that the formulaic approach of a TABOR makes a key assumption that is terribly naive and misinformed. TABORs assume that the grow in population plus inflation is always sufficient to deliver vital services.

There are a number of reasons why (PDF) that central assumption is as dumb as a box of rocks.

First, “no existing measure of inflation correctly captures the growth in
the cost of the kinds of services purchased in the public sector, so the
inflation adjustment generally is not sufficient to allow the continuation
of existing services. State governments spend much of their money on
education and health care, which typically have cost increases greater
than the general rate of inflation. Within the Consumer Price Index
(CPI) itself, medical care and education have been growing at twice the
rate of the overall CPI.”

Second “the subpopulations that state governments serve tend to grow
more rapidly than the overall population growth used in the formula. For
example, while total population grew by 15.4 percent from 1990 to 2002
[in Colorado], total state prison population grew by 83 percent, disabled
children in schools grew by 35 percent, and the number of elderly and
disabled persons on Medicaid grew by 70 percent. Over the next 40
years, the elderly population will grow at twice the rate of general
population growth.”

Third, the population growth plus inflation formula “fails to take into
account the possibility that court, voter, or federal mandates may require
a state to take on new responsibilities. Mandates, whether internal or
external, may increase the responsibilities and costs borne by the state
without any proactive policy change on the part of state lawmakers.
Rigid tax and expenditure limits, such as those based on population
change and inflation, inadequately reflect the potential costs that may be
imposed on state and local governments.”

Fourth, “state governments inevitably face spending needs that cannot
be anticipated. Natural disasters, public health emergencies, economic
changes, and other such occurrences place expensive but unexpected
demands on state and local governments.”

And finally, because the “population growth plus inflation adjustment is
applied to the amount of actual expenditures or revenue in the prior
year,” when a states annual budget shrinks, a ratchet effect creates a
“new base [each year] to which the population growth and inflation
adjustment is applied [and in this case of a budget decrease] the level of
public services is permanently ratcheted down.”

TABORs are just simplistic and politically appealing suicide pacts. They destroy essential services and further infantilize our political culture by placing real desicion-making outside the reach of the political institutions where that power is supposed to reside. We should demand that our political leaders make real decisions regarding public revenue and expenditures, and be accountable for those decisions, instead of asking voters to so bind the government that it cannot even accomplish the basic function of deciding what revenue is needed to perform essential public functions.