THE WESTERN FRONT
URL:http://www.opinionjournal.com/columnists/bminiter/?id=110002574
Ballot-Card Monte
Will voters fall for a political shell game?
BY BRENDAN MINITER
Tuesday, November 5, 2002 12:01 a.m. EST
In politics, the more complicated a promise, the more likely that it is just a distraction from the real issue. An old farmer in the Shenandoah Valley once told me that nugget of political wisdom. I hope his fellow Virginians remember that today when they head to the polls. Residents in Arkansas and Washington state should take it to heart as well. For voters in these three states will weigh in on tax initiatives. And in each state tax-and-spend politicos have spent months promising that the issue is about roads or education--anything but how much people pay in taxes or how much the state already wastes.
Virginia voters will decide whether to create two special tax regions that can charge higher sales taxes (0.5% more in Northern Virginia and 1% in Hampton Roads). It's being called a "transportation tax" and the funds raised will be earmarked for local projects.
Washington state also has a transportation tax on the ballot. If Referendum 51 passes, the state hopes to raise $7.8 billion over 10 years by upping truck weigh fees 30%, auto sales taxes 1% and gas taxes nine cents a gallon.
In both cases the tax hiking rationale is flawed. Money is fungible, after all, so "earmarked" revenues free up other money in a state budget. In Virginia, the Legislature is under no obligation to allocate money to a region supported by a specific tax. Indeed, Richmond already shortchanges Northern Virginia in each budget cycle, according to a Cato Institute report.
Arkansas voters, meanwhile, have an antitax initiative on the ballot; it would repeal sales taxes on food and medicine. Opponents of the initiative say the tax goes for schools, but "people don't buy that," Arkansas Policy Foundation President and repeal advocate Gregg Kaza told me. Little wonder. After all, when Gov. Bill Clinton raised the sales tax, he too promised the money would improve education. It didn't.
A pro-tax coalition took the issue to their last refuge--the courts. Late last month the state Supreme Court heard arguments in the case--which centered on procedural issues--that could've stripped the issue from the ballot. Two years ago the court struck an antitax initiative from the ballot, too late to reprint new ballots. The state told voters were told to ignore the initiative, but many didn't and the initiative "passed" overwhelmingly. That won't happen again this year; two weeks ago Arkansas's high court upheld the initiative.
There's a larger issue here than a few state ballot initiatives. Throughout the 1990s state spending galloped along with the economy. Now spending to meet new budget baselines is eating up rainy day funds and pushing budgets into the red. That's why half the states raised taxes in 2001 and 2002 for a total of more than $10 billion, according to the American Legislative Exchange Council. Thirty states will likely consider major tax increases in 2003. In all the states face at least a $40 billion budget deficit this year.
Corporate America faces a similar problem. The difference is that the private sector is meeting the challenge by reducing work forces and improving efficiency. Now's the time to trim the fat that naturally builds up during flush years.
There's plenty of fat in Virginia. That state's deficit is fast approaching $2 billion, and this after lawmakers closed a $3.8 billion budget shortfall earlier in the year. In a two-year budget of $25.7 billion--up from $17.6 billion in 1996--a tax increase won't cover the spread. So even Gov. Mark Warner, a Democrat, is talking about cuts--$858 million in spending and about 1,800 state jobs. Best of luck to him. But with a 13% budget increase in 1999, 7% in 2000 and 9% last year, he'll have to slash much deeper before he reaches bone.
Washington state's deficit is also approaching $2 billion. Last year lawmakers balanced their books in part by borrowing $450 million against the tobacco settlement revenue expected over the next decade. Washington's annual spending has increased 66% since 1991, to $13.4 billion. The state has plenty of money to spend; it just wants more. And saying it is for roads may engender enough political support for the tax increase.
It's all pretty simple really. Tax collectors were once tarred and feathered in this country. Now they hope to fleece the taxpayer by calling for more tar.
Mr. Miniter is assistant editor of OpinionJournal.com. His column appears Mondays. |
