State lawmakers and Gov. Brad Little are starting to disclose what we in the policy research world have known for many months: It’s going to be difficult in 2019 to follow through on the promise to eliminate Idaho’s sales tax on groceries. But they should.
During the Associated Press’ annual preview of the legislative session, Little repeated his campaign pledge to repeal the grocery tax, but said he wouldn’t support a repeal if it interferes with spending priorities, in particular, education.
Herein is the problem, as House Speaker Scott Bedke noted (but perhaps the media didn’t understand) last week: The state has spent so much money in recent years, obligating future Legislatures to maintain and automatically increase spending, that most of the funding available for tax relief has already been spent by the time lawmakers arrive in Boise.
For a refresher: Back in 2011, the state budget hovered at about $2.3 billion. Today, the state general fund is nearing $4 billion. This increase isn’t a function of population growth but rather politicians’ overindulgence on our post-recession roaring economy. Elected officials have continuously made promises that everyone knew would be hard to keep if our economic fortune changed.
Bedke explained that the state’s baseline maintenance budget—the amount of money necessary to run the government year-over-year exactly —used to require an increase in state support between 1 and about 3 percent. These yearly increases typically cover new replacement items, like worn-out computers or high-mileage state vehicles. (I’d add that some years, the increase in spending needed to maintain government was zeroed out).
For the next fiscal year, however, state taxpayers could be asked to shell out 5 or 6 percent more just to keep the state government operating as it is, without the addition of services or programs. For the upcoming fiscal year, much of the increase is being driven by education special interests that have secured additional funding for teacher pay (without any expectation of improved student outcomes). The next installment of the teacher pay program, more than $50 million, is due in the next budget year.
In sum, state politicians have obligated us to pay for programs we taxpayers can’t afford, perhaps with the hopes the good times would continue, perhaps to appease special interests that comprise Education, Inc. (the teachers unions and school boards association). Prior commitments have reduced the availability of money to pay for other needs—roads, bridges, criminal justice, and so on. Add to that programs whose costs are escalating each year without any brakes: the state pension system, public employee health insurance, and government healthcare programs like Medicaid. These programs pressure the state budget, which causes Idaho’s income taxes to be the highest in the intermountain region, and Idaho remains one of the few states that finds it necessary to tax people on the food they eat.
It’s understandable that lawmakers have made commitments to special interest groups to fund certain government programs. But Little and lawmakers have also promised to reduce taxes. It’s hard to understand why the groups that want expanded government see their priorities protected, but the promise to lower taxes on the people who pay the bills is the last priority. It shouldn’t be that way. This is the year elected officials must flip the script, and put the promises made to the people who pay the bills—the taxpayers—ahead of the promises made to the special interest groups.