Senate Bill would give voters an opportunity to reform I-1053
Senate Bill 5944 was heard yesterday in Senate Ways and Means, which would give voters (via a referendum clause) an opportunity to improve decision-making in the state budget process.
SB 5944 would place a referendum on the November ballot that would clarify Initiative 1053. If approved, the measure would allow policymakers to modify, clarify, or eliminate special tax breaks with a simple majority vote of the legislature – the same standard applied state spending on health care, education and other important priorities.
Under I-1053, it is extremely difficult for lawmakers to cut state spending on special tax breaks, due to the onerous supermajority (two-thirds) vote requirement. However, state spending on our public health and education infrastructure can be cut with a simple majority vote of the legislature.
Three key points about SB 5944:
• It would give voters a chance to create a more balanced and rational state budget process that considers all forms of state spending – including the billions of dollars spent each year on special tax breaks;
• It is a widely held perspective – among both conservative and progressive economists – that narrow tax breaks are state spending programs; and
• Mainstream economic theory informs us that cutting only public services this year would dampen and prolong our economic recovery.
SB 5944 would give voters the chance to put all forms of state spending on equal footing. The measure would give us an opportunity to move toward a budget process in which we rationally set our public priorities. It would also allow us to even-handedly assess each policy tool – no matter if it is a direct expenditure or a tax subsidy.
Some will argue that special tax breaks or “tax expenditures” are not equivalent to direct forms of state spending. As we have previously highlighted, this argument doesn’t hold up upon scrutiny.
Additionally, some will contend that eliminating special tax breaks would harm our state economy. However, it is clear that drastic cuts to our core public health and education systems would do great damage to our state economy and our future.
Our policy brief, “Every Dollar Counts: Why It’s Time for Tax Expenditure Reform,” provides more analysis on how we can reform our tax break system
