FreedomWorks

I’ve been often quoted for saying, “Three groups spend other people's money: children, thieves, politicians. All three need supervision.”

Our state governments’ budgets have been especially in need of oversight the past three years, as many state politicians have wildly overspent and then demanded tax increases to fund their profligate ways. Fortunately, Citizens for a Sound Economy (CSE) and our great members have been on the job. CSE and our allies scored huge wins in Alabama and Oregon, where voters in both states decisively defeated billion dollar tax increases. We’re currently working against other tax increase plans in Virginia, Nevada, Tennessee, Wisconsin, and Washington State.

Just turning back tax increases, however, is not enough. It’s truly great that a tax revolt is sweeping the nation, but even in defeating a tax hike, we have to recognize that we’re still on defense. I sometimes feel like we’re playing a “Wack-a-Mole” game at the fairgrounds, where the little critters pop up all over the place and we have to smack them back with a mallet. Oregon, tax hike. Pow, got it! Alabama, pop, got it! The forces of bigger government, however, are relentless. Occasionally, we’re going to miss, and one of these tax increase moles will slip through our defenses. And once a tax hike is in place, it will probably be there forever.

The problem is that the forces of liberty are backed into a corner. In all of these states, irresponsible politicians continue to spend and spend—even when they know the economy is struggling—driving the car off the budgetary cliff. They refuse to make difficult choices, instead presenting their states with a budget larger than what they have to spend. Then, they simply shrug their shoulders and say “Hey, look, we’re hundreds of millions of dollars in the red, it is time to raise taxes. And, if you don’t, we’ll have to severely cut the state’s most important and visible programs.” It’s a kind of budgetary blackmail. And the liberal media, instead of holding these guys to task for failing to manage the state’s finances responsibly, instead just echoes their call for more taxes.

This game is clearly rigged against us. The key, then, is to slow the growth of spending in the first place, and not get stuck trying to steer a car that is in freefall over a cliff. But how can we force state politicians to make responsible budget choices before there is a budget “crisis”?

One way is to improve the budget process. Unfortunately, government has some pretty twisted institutional incentives. Politicians and bureaucrats are often rewarded for pleasing narrow special interests and sticking the taxpayer with the bill. The special interest will love the new program and give praise and other rewards, but the average taxpayer doesn’t have time to complain about a small incremental increase in his or her taxes. The special interests win every time. Economists like to call this phenomenon “concentrated benefits, dispersed costs.” At CSE, we call it a problem that needs to be tackled. It’s time to put the interests of taxpayers back into the state tax and budget process.

In several states, CSE is advancing the concept of a “Taxpayer Bill of Rights,” or TABOR. Depending on the state, TABOR has different elements, but the overall idea is that TABOR should change the budget process to protect taxpayers and their property. It is an idea that has been very effective in Colorado, where the growth of government has been slowed and the economy now grows faster than almost any other state.

TABOR includes the principle that budgets should not grow faster than population growth and inflation. Some TABOR proposals include budget caps to limit spending growth along these lines. It’s a good idea, but even with this principle, we should not concede that all of the government’s programs are worth funding. All states should be prepared to starve or eliminate less effective programs and shift that funding to priorities, all within the broader constraint on spending growth.

Other TABOR concepts include creating a supermajority requirement to raise taxes, so that a tax increase needs 2/3 vote of the legislature. This raises the bar for politicians seeking more of your paycheck, and should be a feature of every state constitution.

Finally, perhaps the most powerful TABOR measure is a requirement that all tax increases also be approved by a vote of the people. Let’s let everyone vote, up or down. Bringing public scrutiny and approval to the process is the key to giving taxpayers a place at the table. Plus, in a public, open debate about the overall merits of a tax increase, we think we can beat the tax-and-spend interests every time—because lower taxes are good policy, and good policy is good politics. Indeed, the public votes against the tax hikes in Oregon and Alabama are now forcing those governments to take a hard look at waste and excessive spending.

CSE is fighting to stop all tax increases, but in 2004 we’re also going on offense in Oregon, Washington, Tennessee, Wisconsin, Florida, and several other states to pass TABOR protections.

It’s time to change the state budget game. For more information about the TABOR concept, and to find out about efforts in your state, please call CSE toll-free at 1-888-564-6273.