States have seen tax revenues flourish this year, leading to budget surpluses of various sizes. So, if you have a budget surplus what do you do? Do you:
(a) Increase spending, to help the people who supported you or groups who may support you? (Think unions and other constituency groups.)
(b) Decrease taxes, because it’s our money that you’re spending?
(c) Vociferously announce that you’re going to decrease taxes, but do only a little bit of tax decreases while increasing spending as much as possible?
Never underestimate the cynical nature of politicians. Thus, (c) is almost always the correct answer, as this article in the Wall Street Journal notes (Pay $ Link).
Of course, we do need to point out that in Michigan, a state that is bleeding jobs with an industry in trouble (automobiles), a tax code that troubles business, and a dysfunctional state government, Governor Granholm, a Democrat, vetoed the Republican-led legislature’s move to eliminate the state’s business tax. Governor Granholm called the Wall Street Journal’s reporting that Michigan’s tax structure is anti-business “treasonous.” We call it honesty in reporting.
Here in the Golden Bronze State, Governor Schwarzenegger has proposed a $68 billion bond measure to pay for infrastructure improvements; this measure will be part of a very crowded November ballot. Of course, the state has again missed the June 15th deadline for passing a budget. The more things change….