Final Budget Misses the Mark on Building a Strong Economy
The budget that the Governor signed into law today misses the mark on strengthening the economy and meeting the public’s needs. Rather, it relies on accounting maneuvers and further cuts to investments that keep families economically secure.
Increasing our state’s resources, which would stimulate economic growth and promote jobs by strengthening our schools, transportation system and other assets that employers need, accounts for less than 1 percent of the solution to the $1 billion shortfall.
All told, only $6.7 million in new revenue was enacted this year. Policymakers curtailed an unproductive tax break claimed by large out-of-state banks and closed a loophole that allowed businesses selling roll-your-own cigarettes to avoid charging cigarette taxes. However, lawmakers also shortchanged future revenues by doling out or renewing a number of tax breaks for food processors, newspapers, movie companies and others, costing the state $19.8 million.
One-time transfers of funds and other accounting changes make up the biggest share of the budget solution (65 percent), with the largest portion coming from a change in the way tax collections are distributed to local governments. By distributing payments on a monthly basis, rather than daily, the state will get a one-time boost of $238 million.
Spending cuts make up about one-third of the budget solution. The Legislature avoided additional cuts to colleges and K-12 education, but approved cuts to health care, environmental protections, and services that sustain families during difficult financial times.
This continues policymakers’ misguided three-year trend of responding to the economic crisis primarily by cutting services that grow a strong economy rather than building a revenue system that supports a healthy workforce, sound roads and bridges, and other public priorities. As the graph below demonstrates, cuts have been 17 times greater than the amount of revenue generated through tax measures since 2009.
Such a strategy is as unwise as it is unsustainable.
Stay tuned to schmudget for more analysis on the final budget.