Wednesday, July 6, 2016

Asa wins the spin on budget numbers

Posted By on Wed, Jul 6, 2016 at 7:14 AM

click to enlarge THE BOTOM LINE: With small exceptions (gambling and alcohol) only sales tax revenue showed any increase in fiscal 2016.
  • THE BOTOM LINE: With small exceptions (gambling and alcohol) only sales tax revenue showed any increase in fiscal 2016.
It's pretty well unanimous — with one exception here — that reporting on the year-end state revenue numbers focused almost exclusively on a "surplus" of $177 million and not how Gov. Asa Hutchinson was able to develop such a surplus to start with.

The at-least equally important figure was the bottom line: The state of Arkansas took in $19 million less in fiscal 2016 than the year before. A sign of robust growth this was not, not even when you factor in the income tax  cut for wealthier people that contributed to the figure. Individual income tax collections were down; corporate income tax collections were down. With more people working (generally at lower wage jobs) sales tax revenues were up. This helps you understand why Hutchinson omitted low-income workers from the last tax cut. They spend every penny they earn. Income tax breaks are for the "job providers," in his view, not retail clerks, burger flippers and hospital orderlies.

But again: We have a surplus because of what Hutchinson himself called"conservative" budgeting. It's useful to repeat this as the governor moves toward yet another tax cut so that we may replicate the Louisiana and Kansas economic miracles:

* State employees got no pay raise.

* State health insurance plans avoided big rate increases by spending reserves, which inevitably will run out and create demand for either 1) a giant infusion of state money or 2) a giant rate increase for workers. You guess which option Asa is likely to choose.

* Zero increase in budgeting for colleges. Tuition went up yet again to cover rising costs, meaning bigger debt for students at the end of their road to higher education.

* Prisons are well past capacity because the governor decreed we couldn't afford new facilities for the ever-increasing incarcerated population.

* Payrolls are being slashed at some critical agencies (think Department of Environmental Quality) even as high-priced high administrators are being added to reward Republican Party faithful. The laissez faire approach to such things as environmental regulation doesn't require much staffing, of course. Budget rigor is situational. Over at the Insurance Department, former GOP legislator Allen Kerr is busy junketing, proposing a palatial new building and refusing to fulfill FOI requests about his idea (squelched by the governor so far) to raise fees on insurance agents selling health marketplace coverage to create still more cash for his empire.

* General revenue is being tapped for the first time to build roads.  Ever-wider freeways to divide and pollute downtown Little Rock preferred.

With this background, the governor yesterday called for still more tax cuts.

But first, he must be off on a $70,000 junket to high-tax, unionized Germany to reopen a state office in Berlin to attract some investment in Arkansas. (Where's that German office in Arkansas, again? I guess over at AEDC, where they hand out corporate welfare financed with working class sales and income tax dollars.)


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