Wednesday, December 29, 2004

COLUMN -- Government's fiscal landscape different

Posted by Craig Westover | 4:13 AM |  

Wednesday, December 29, 2004

With the word count of a good-sized novel, the daily Pioneer Press is a pasticcio of thought and observation. The hands of many writers and commentators plant themes that vine throughout its pages. A case in point appeared Thursday.

The seed catching my eye was the lead editorial, which headlined Wisconsin's proposed Taxpayers Bill of Rights as wrongheaded. The amendment to the Wisconsin Constitution calls for capping state spending increases based on population gains and changes in the consumer price index.

The editorial interpreted Wisconsin's proposal to mean "that the bottom of a recession, in which state government rightly constrains spending, would become the new baseline for state budgeting in future years, artificially depressing spending as the state struggles to recover" [emphasis added].

The editorial expresses the common mistake that government budgeting is like household finance: Cut back when times are tough; spend more when things are looking up. Contrast that view with one that holds government always operates only within specified limits and always strives to operate more efficiently. When times are good, responsible government resists temptation to exceed its authority, even for a "good cause," and continues to efficiently operate within its authorization.

How do those two views have impact on life outside the editorial ivory tower? The vine runs to a story in the Washington County edition of the Pioneer Press reporting the pros and cons of closing a Forest Lake elementary school to help reduce a $2 million gap in the district budget.

According to the story, school board member Karen Morehead isn't ready to think about a school closing. She's "hopeful" state legislators will give schools an inflationary increase in funding this spring, and that Forest Lake voters will approve a revenue-boosting operating levy in November.

Morehead is quoted: "I'd rather focus on talking with the community about how we spend money and what the district's needs are." Her comments reflect the editorial position don't "artificially depress spending" if it's not necessary.

School board member Keith Dunham expresses the contrasting attitude, saying maybe closing an elementary school would be a good idea regardless of the outcome of the operating levy referendum.

"It would only be prudent to do a financial analysis," Dunham said.

Whatever that financial review turns up (it might prove necessary to keep all the elementary schools open), Durham is acting as the responsible government official. Even if money is available to keep a school open, if it doesn't make sense to do so, it shouldn't be done.

Leafing out to the front page of Thursday's Pioneer Press, we read that Gov. Tim Pawlenty proposed a constitutional amendment that dedicates all Minnesota motor-vehicle sales taxes to road construction and mass transit projects. Currently, motor-vehicle sales taxes help pay for other state "needs" through the general fund.

Besides removing money from the general fund, Pawlenty is being attacked for failure to consider raising the gas tax. He stands by his Taxpayers League of Minnesota "no new taxes" pledge.

"A good CEO does not limit his options or flexibility," Senate Majority Leader Dean Johnson, DFL-Willmar, said of Pawlenty's fiscal stance. He echoes the editorial's assessment that "Legislators cannot govern smartly when they paint themselves into a corner."

But Johnson confuses the job of governor and corporate CEO, when in fact the two are very different. A CEO plans for product and service expansion, which increases company profits. Waste and failure are byproducts of corporate growth. For every product success, a company funds multiple false starts anticipating the profits from a big winner.

A governor necessarily operates within the limits of the state constitution. His agenda is funded by forced taxation, not risk-reward investment. It is not a governor's role to experiment by expanding government "services." Enabling (not building and operating) a statewide transportation system is a legitimate government function. It's fiscally responsible to provide it with a dedicated source of funding.

This brings us back to the Pioneer Press editorial and the root error. "Rightly constrains spending" and "artificially depressing spending" are meaningless phrases that stand in "wrongheaded" opposition to efficient, effective limited government. A Taxpayers Bill of Rights and a "no new taxes" pledge may not be the best answers, but they certainly reflect the right attitude. "Painting legislators into a corner" just might be the only way to force "hard decisions."