Monday, July 31, 2017

Lean Times

No less a news outlet than the Washington Times is reporting today that House Speaker Austin Knudsen, whose economic ideology fits that of the Times to a tee, is defending almost $100 million in looming budget cuts because they are “doing what they are supposed to: Reducing the size of state government in lean economic times.”

Well, that’s not really quite right. What those cuts are supposed to do is balance the state’s budget at a time when we are collecting less tax revenue than we expected.  The Montana constitution says that the budget must be balanced, and as long as the Republican majority obstinately refuses to increase any tax at all, the only way to do that during “lean economic times” is to cut spending.*

Of course for the Republicans, if a collateral effect of balancing the budget is to reduce the size of state government, they’re all in. What the hell: in their world, reducing the size of state government is always a good idea, even if it means reducing spending and the provision of vital government services at the moment they’re most needed, i.e. during lean economic times. It’s a notion that flies in the face of the common sense observation that government spending ought to be counter-cyclical; it should grow faster that the economy during downturns, and slower than the economy during booms.

It’s provisions of Senate Bill 261 from the 2017 session that are creating the mess we are currently contending with. In the long run, the bill establishes a reserve fund that will stabilize the budget by allowing a modest decoupling of spending and taxes; when that happens, it will be a good thing. We won’t be forced to reduce  the size of government during lean economic times.

But the way SB 261’s written, spending in the immediate future - over the next biennium  - is very sensitive to the amount of revenue we collected last fiscal year.  I’ll spare you the grizzly details; but suffice it to say that the cuts that are triggered will severely impact agencies serving the elderly and the disabled, the university system, and the schools. That may gratify the Speaker by reducing the size of state government, but it’s really not what we want to be doing.


*During the 2017 session there were bills to increase taxes on tobacco products, alcohol, the profits that corporations doing business in Montana hide in tax havens and very high individual incomes. Needless to say, not one of those bills passed.

Sunday, July 30, 2017

Sticking with the Paris Accords

In the wake of Donald Trump’s decision to withdraw from the Paris climate accords, a bunch of governors, mayors and business executives have announced their intention to stick with the Paris commitments. There has also been active organization in support of the agreement among state legislators (you can read the details at the National Caucus of Environmental Legislators website); in Montana, a group of us sent the letter below to Governor Bullock, urging him to join in the effort.

Dear Governor Bullock:

As legislators who are profoundly concerned about the threat of climate change, we applaud your recent statements regarding the danger to the people of Montana posed by President Trump’s decision to withdraw the United States from the Paris climate accords. Like you, we recognize that climate change can only be arrested through international collective action that includes the committed participation of the United States. In withdrawing from the Paris accords, the President has abandoned that commitment, and, sadly, American global leadership in general. While it is true that the remaining signatories have pledged to forge ahead, we believe that the accords have been seriously destabilized, and the potential consequences of that destabilization, for Montana and indeed the whole world, are extraordinarily serious.

But all is not lost. Numerous governors, state legislatures, mayors and businesses have stated their intention to honor the United States’ Paris commitments despite the President’s decision to withdraw them. We believe that these actions are essential to sustaining the Paris agreements until the Federal government is once again able to conduct itself in a responsible manner, and we believe that Montana should join in that effort.

Specifically, we believe that Montana, under your direction, should commit itself to firm, quantitative, and verifiable reductions in statewide greenhouse gas emissions.

We recognize that technically, economically and politically such a commitment will be very challenging, but we are confident that it is within the resources of your office to initiate the analysis and planning required to put emissions reduction efforts in place, and we stand ready to work with you as we move forward. We believe that the efforts of Governor Schweitzer’s Climate Change Advisory Commission in 2008 and of the Department of Environmental Quality in 2014 (in response to the EPA’s Clean Power Plan) provide useful models of how to proceed as well as an important existing cache of information regarding emissions reduction strategies.

Regardless of how they are undertaken, we believe that the following are the minimum necessary steps for developing and implementing an emissions reductions plan:

1.     Development of an emissions inventory and monitoring system capable of verifying that target reductions are being met.
2.     Identification of effective strategies for reducing emissions. Many of these - particularly those associated with electrical generation, such as improved efficiency, replacement of fossil fuels with renewables, carbon capture and storage, and so forth - are already well known. Others, especially those related to the transportation and industrial sectors, less so.
3.     Determination of the cost of various strategies and of the least cost combination of strategies capable of producing targeted emissions reductions.
4.     Analysis of the policy measures and, in particular, the legislation required to implement the least costly combination of strategies. This analysis should include market-based policies such as carbon taxes, offsets and bubbles, cap and trade, interstate and intraregional emissions trading, and the like.
5.     Because capping emissions will inevitably lead to a transformation in the way energy is produced and transportation is managed, an assessment of the impacts of the policy on adversely affected communities, industries, occupations and income groups is essential, as well as the identification of measures needed to ameliorate those impacts.

We understand that mandating and achieving meaningful reductions in the state’s greenhouse gas emissions is going to be no easy feat. We understand as well the compelling logic of doing nothing, avoiding the costs of action, and benefiting from the efforts of others. But that logic, compelling as it might be, is myopic. If it applies in Montana, it applies with equal force in California and Hawaii and China and France, and ultimately leads to paralysis. To see beyond that wrongheaded logic requires vision, creativity, and the courage to risk self-sacrifice. In a word, it requires leadership. In our view, to the grave peril of the nation and the world, President Trump does not understand and refuses to exercise the leadership required of him. And so we ask you to step forward, and pledge to support you in this effort.

Rep. Kim Abbott
Rep. Laurie Bishop
Sen. Dick Barrett
Rep. Bryce Bennett
Rep. Zach Brown
Rep. Willis Curdy
Rep. Amanda Curtis

Rep. Mary Ann Dunwell
Rep. Janet Ellis
Sen. Tom Facey
Rep. Dave Fern
Rep. John Fleming
Rep. Mofle Funk
Sen. Jen Gross
Rep. Jim Hamilton

Rep. Ellie Boldman Hill
Rep. Denise Hayman
Sen. Margie MacDonald
Sen. Sue Malek
Rep. Shane Morigeau
Rep. Andrea Olsen
Sen. Mike Phillips
Sen. JP Pomnichowski
Rep. Marilyn Ryan
Sen. Diane Sands
Rep. Kathy Swanson
Sen. Cynthia Wolken
Rep. Tom Woods
City Commissioner Andres Hallway, Helena
City Commissioner Rob Farris-Olsen, Helena
Mayor Bob Kelly, Great Falls
Mayor Carson Taylor, Bozeman
County Commissioner Jean Curtiss, Missoula
County Commissioner Nicole Rowley, Missoula
County Commissioner Dave Strohmaier, Missoula 

Thursday, April 20, 2017

Swiss Cheese

Not for the first time, Fred Thomas is about to make my head explode.

In a YPR interview with Chuck Johnson yesterday, Thomas* suggested that in order to wind up the current legislative session, he (and his caucus, one presumes) need to strike a deal with Governor Steve Bullock. The way it’s supposed to work, the Republicans will throw their support behind an infrastructure bonding bill - which Bullock really wants -  if the Governor will back a bunch of selective tax cuts – which the Republicans really want. Of course it’s not just Republican legislators who like these tax cuts. The beneficiaries – international corporations who shield their Montana profits from taxation, high income venture capitalists, telecommunications companies, high rollers who promise to build data centers, companies that are required (oh, the outrage of it!) to install pollution control equipment – also think they are pretty peachy.

What I don’t get is how Thomas can keep a straight face when he proposes a deal like this and then claim, in the same breath, to be fiscally responsible. What we’re gonna do, apparently, is swallow hard and borrow a bunch of money, and then take a big bite out of the future revenue stream we need to pay the money back! How does that compute? And if we are going to be building infrastructure with the money we borrow, why in God’s green earth shouldn’t all these folks agitating for tax breaks help pay for it?

Thomas, bred-in-the-bone supply-sider that he is, will no doubt tell you that these tax cuts will more than pay for themselves! That's because if we offer a tidy "incentive" to these footloose outfits, they swear they'll come to Montana. And if we don't, they’ll go somewhere else. The way Thomas puts it, we need to make Montana “competitive” so they’ll set up shop here. And we know that because they tell us so, over and over again.

When, if ever, will we learn that these guys dangle the same bag of gold in front of the noses of every state legislature in the country? When, if ever, will we learn than when the race to the bottom is finished, we’ll end up with a tax system with more holes in it than a block of Swiss cheese, and nothing to show for it?

When, if ever, will we learn that if these guys do end up in Montana, they’ll be demanding not just infrastructure, but police and fire protection and an educated work force and freedom from environmental regulation and subsidized air fares and even more tax cuts?

When, if ever, will we realize that we are dealing with people that are telling us, in so many words, that they are willing to do business in Montana only if they don’t have to pay the same taxes the rest of us poor schmucks do?

When, if ever, will we realize that good tax policy means defending the interests of all the people and businesses that are already here and committed to Montana, who get up every day, send their kids to school, go to work and pay their taxes without complaint and without looking for a handout?


* For those of you not familiar with Treasure State politics, Thomas is the Republican majority leader in the Montana Senate.