how to "balance" a budget

since property tax bills hit a week or two back, local right-wingers have been screaming as loud as they can about the need to cut spending. (of course, at the same time, they've been demanding massive spending increases for public safety, which they also do not see as a contradiction.)

but as doug has discovered, governor daniels has come up with the best method ever for cutting spending... simply refusing to pay your bills! this method of budgeting is awesome because you still get all the stuff you want; you just don't have to pay for it! doug shows us how it works:

Let me make sure I understand this. For many, many years, the State recognized that it imposed numerous burdens on local governments without giving those governments sufficient taxing flexibility. This recognition came in the form of the property tax relief credit and the homestead credit — these State subsidies reduced property taxes. Then, in 2005 and 2007, these credits were reduced by the General Assembly, effectively balancing the State budget on the backs of the counties. Reduction of these credits is a significant part of the huge property tax increases. So now we find out the State is projecting a billion dollar surplus.

This is not a case of those dumb counties outspending their means only to have their hand out when the fiscally responsible State has a surplus. Nope, these jacked up property taxes are directly related to the State surplus. If the State had not reduced the property tax replacement and homestead credit, the surplus would be less and so would the necessary property tax increases.

I could run a surplus too if I had the power to stop paying for the the things I demand.

that's brilliant! (if you read the article touting the massive surplus, you discover that about 4/5 of that surplus can't be spent, which further demonstrates the budgeting acument of our governor.)

then, when local governments were forced to raise taxes to make up for the bills the state wouldn't pay, the guv insisted that runaway local spending was the real problem. funny enough, some people believed him, even people who should know better, like the star ed board, who ran an editorial today effectively blaming all of the state's tax woes on local governments. which is not to say that the editorial doesn't include some good ideas for how to streamline local governments, only that the ed board seems to be ignoring the paper's own news reporting to come to the oversimplified conclusion that "Tax hikes are the result of neglecting reform and public safety."

for example, the editorial repeats the GOP talking point that "pocketbooks will likely take another hit if Peterson succeeds in passing a 65-percent increase in the county option income tax." raising taxes by 65% sure sounds like a lot, and in a manner of speaking it's true, but if you look at the actual numbers (provided conveniently by the star's news page), you get a slightly different picture:

The county income tax rate, which already increased to 1 percent from 0.9 percent on July 1, would rise to 1.65 percent under Peterson's plan. For a person earning $50,000 a year in taxable income, the extra spending would cost an additional $325 a year, bumping the annual total to $825 from $500.

A special provision approved by the legislature this year allows Marion County to raise the income tax by one-half of a percentage point to pay for public safety. But it also requires the county to freeze property tax increases for at least two years for all taxing units in Marion County except schools.

To make up for the lost revenue, the state requires the county to raise income taxes 0.2 percent. This increase, which amounts to about $32 million, must be realized before the 0.4 percent public safety tax increase. The city had originally said 0.5 percent would go to public safety but later realized the property tax freeze would cost more than it originally estimated.

The freeze is expected to increase income taxes by another 0.1 percent in 2009, but it is unclear whether the city will keep the tax unchanged by reducing public safety spending.

The state law also requires a contingency fund of 0.05 percent because income tax collections are not as reliable as property taxes. The total new revenue raised would be more than $100 million, but Marion County must share about 10 percent with townships and other taxing districts.

so bart wants to raise taxes from 1% to 1.65%, which would mean the average taxpayer would pay maybe a couple hundred dollars more per year (spread out across the year, so the hypothetical $50,000-earner, if paid bi-weekly, would see each paycheck go down a whopping $13). it is true that .65 is indeed 65% of 1, so calling this a 65% tax increase is not exactly a lie. but you could just as easily call it an increase of .65% (accent on the point), of which .25% is mandated by the state. one can argue that increasing the county income tax is not the appropriate way to deal with the county's property tax problems, but to pretend this would be some gargantuan tax increase is a bit disingenuous. (and is probably even more disingenuous when so-called "fairtax" supporters say it, considering they want to eliminate property taxes altogether and replace them with an even bigger increase in income tax, along with increasing the state sales tax to something like 10%-11%. now that would be a big tax increase.)

and while i'm talking about the star ed board, does anyone know if their expresso blog is dead or merely dreaming? there hasn't been a post on that thing since june 8, which is pretty pathetic for a group blog, especially one where the bloggers are full-time employees who are presumably being paid to, among other things, blog.¶