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Is ‘education’ spending really holding Idaho back?

Is ‘education’ spending really holding Idaho back?

Fred Birnbaum
August 14, 2014
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August 14, 2014

A common thesis repeated frequently by the mainstream press is that the state’s citizens are lagging financially because both K-12 and higher education funding are inadequate. In fact, Idaho does have one of the lowest levels of per capita income in the country, second only to Mississippi.

Recently, The Spokesman-Review picked up on this theme with an article titled, “Report: Idaho economic performance falls on heels of cuts to schools, taxes.” The article is based on a report from the Idaho Center for Fiscal Policy, attempted to connect the dots with a two-page summary, “Six key facts about Idaho’s revenue shortage and our declining economic performance.”

There are a number of problems with the data presented in the report. For example, the sharp decline in state income level relative to other states took place from 2004 to 2008, yet the decline in K-12 per pupil spending cited begins in 2008. Even if we accept the relationship between K-12 spending and state economic performance, how likely is it that the correlation would be evident so quickly?

The sharp increase in college tuition is also noted as a factor, but this is a national issue with even the president stating that university costs and tuition are rising too quickly.

Another fact presented is that Idaho’s tax structure results in lower and middle income residents paying a higher percentage of their income in taxes than the top 1 percent. Not mentioned is that this is a characteristic of every state, and that Idaho’s tax system is more progressive than the average of the states and much more progressive, for example, than in Washington state.

In Idaho, the bottom 20 percent pay 8.2 percent of their income in taxes, compared to 11.1 percent on average nationally, and 16.9 percent in Washington state.

We are also told that, “Idaho has steadily cut revenues since the late 1990s.” Since Idaho has to balance its budget and that General Fund spending has increased at a 3.6 percent compounded annual average growth rate (from 1998 to 2014), how can it be that “Idaho has steadily cut revenues since the late 1990s?” How does one square the spending increase data with the notion that
Idaho does not collect enough revenue? The general fund increases don’t even take into account the increasing amounts of federal money flowing into the state for education and other services.

So, to summarize the Idaho Center for Fiscal Policy’s position: Idaho does not tax enough, does not tax progressively, does not spend enough on education and the result is poor economic performance.

No mention is made of the huge decline in the resource-based economy tied to timber harvesting due to federal land use policies, the decline in the size of companies like Micron and HP, nor alternative tax and other public policies that are enabling the states making the biggest income gains to prosper.

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