Monday, March 9, 2015

Money to Burn

When Gov. Steve Bullock vetoed HB 166 last week, you could almost hear Republicans around the Capitol gnashing their teeth.

The bill, sponsored by House Majority Leader Keith Regier, would have permanently cut income taxes by a little more than $40 million a year, which House Republicans touted on Twitter as “returning part of the surplus to taxpayers.”

When, if ever, are these guys going to learn the difference between a budget surplus and cash in the bank? It’s really not that hard - most people who have to balance a check book get it already – but let’s take it a step at a time.

A budget surplus is the difference between revenue the state takes in (mostly in taxes and Federal matching grants) and what it spends on highways, schools, healthcare, corrections and other programs and services. Of course there’s no guarantee that this difference is going to be positive. If it’s not – if it’s negative because the state is trying to spend more than it takes in – then the surplus becomes a deficit.

Now deficits are obviously a problem. For one thing, there’s the constitutional requirement that the budget be balanced. For another, if you’re going to run a deficit, you’ve got to come up with the money to cover it. And the only way to do that, since you can’t borrow, is to use up the cash you have in the bank. And that is exactly what HB 166 would have done if the Governor hadn’t vetoed it.

Far from “returning part of the surplus to taxpayers,” HB 166, along with a grab bag of other Republican tax cuts, put the budget into deficit. And that famous $400 million surplus Republicans keep talking about giving back? It never was a surplus. It was the cash we had on hand that had accumulated as a result of sound past fiscal management. And because of HB 166  and those other tax cuts, we were on our way to eating it down to near nothing.

So lets get this straight: in vetoing HB 166, the governor wasn’t stopping the Republicans from returning the surplus. He was putting the kibosh on their running an unsustainable deficit that could only be paid for by burning through the state’s cash. You’d think Republicans would get that, especially after listening to their incessant complaints about the Federal deficit. But no, on this one they can’t seem to put two and two, or even $40 million and $40 million, together. 

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