The Hidden Costs of 2010 Budget

In economics, there is something known as a hidden cost. As defined by BusinessDictionary.com hidden costs are:

Expense not normally included in the purchase price of an equipment or machine, such as for maintenance, supplies, training, and upgrades.

In the process of setting the state budget, members of JFAC will routinely attempt to identity what the fixed and variable costs of any budget setting action might be. They look at the world with little complexity and simply as a matter of "balancing the state's checkbook." Unfortunately, this de minimis view of the budgeting is neither useful nor realistic.

While Governor Otter and majority legislative "leadership" praised themselves for a "stellar" session, they failed economics 101. Yes, the state budget is "balanced" but the true costs are not calculated. As has already been reported, not more one week after the end of the legislative session, the Department of Health & Welfare is closing nine regional office and laying-off 126 employees. Now instead of helping struggling Idahoans get access to services to give them a hand-up, they'll be putting their own hand out.

Unfortunately, the 126 employees is only the tip of the iceberg. Most of the job losses will be seen in the private sector by private social service providers that will no longer be able to offer services, especially in our small rural communities. The multiplier effect is a funny thing, when you cut off income to one group, it finds its way to all segments of our economy. Whats more, as clients of private providers and H&W are unable to get access to services, many of which are preventative in nature, they will undoubtedly be accessing more expensive services in the form institutional care either in corrections or a state hospital. It is a lose-lose propisition with the Idaho taxpayer stuck holding the bill.

The Department of Health & Welfare is only the beginning. In future weeks other agencies will face the budgetary reality that our nearsighted Governor and majority leadership placed upon them and make similar cuts to services and jobs. In education, this will be felt very close to home. In fact, many local districts in rural Idaho will be faced with the choice of closing down entire schools or trying to raise property taxes. So rather than address the funding problem at the state level, the decision was made to make the local district make the tough decision. What kind of leadership is that?

After all is said and done, productivity will decline, marriage and family situations will strain, students will be less well prepared, and Idaho will be worse off. These are the hidden costs to the 2010 budget.

No Alternatives?

The tag line of the majority members of the Joint Finance and Appropriation Committee as they set budgets this year has become, "There isn't any alternative." What I believe to be the most telling of this commentary is the implicit defeatism. It is saying that we in the legislature have no control. If that is true, everyone should be worried.

Consider this quotation from Senator Jim Hammond (R-5):

I’m not comfortable with this budget either. I don’t like it. But I truly don’t see an alternative. As I return home each weekend and I talk to those businesses who have already laid off 30, 40 percent of their staff and are trying to stay alive, they beg me, ‘Don’t tax me any more, don’t raise my taxes, don’t raise the taxes of those employees that I still am able to employ.'

Luckily, the issue isn't an absence of alternatives, but instead the insistence to prefer a slash and burn strategy over a protect and preserve. The slash and burn strategy adopted by the majority is indicative of the defeatism their mantra suggests. However, defeatism doesn't have to win the day, although it likely will. There are several options to improving state budgets that don't include raising taxes, including:

1. Delaying the implementation of the elections consolidation - $8 million
2. Collecting on unpaid taxes - $30-40 million
3. Reforming the parole system - $10 million (approximately)

There are also of course those pesky exemptions and delaying the increase in the grocery tax credit, but there are alternatives. It is an inconvenient truth for the majority that the alternatives exist, and they don't have to be in the form of a tax increase.

Now I do believe that every efficiency in government should be found and any waste needs to be cut. However, there is a point of diminishing returns. We have reached that point. Many students, especially struggling students, will be irreparably harmed by the current budget proposals. The elderly and disabled will be cut off from services that they need to survive. In some cases it is literally a matter of life or death. The corrections budget will put the public safety in jeopardy. That is not hyperbole or propaganda. That is the stark reality.

We have a decision to make and it's a very important one. Do we believe that government should be shrunk, no matter what the costs or do we believe that long-term and social costs should also be considered. My philosophy is the latter. We are not defeated. Idahoans can make it through this difficult time without leaving those in need behind.

2010 Legislative Session Preview

The 2010 Legislative Session is less than a week away and the keyword for the upcoming session has already been coined, "Difficult."

As everyone that pays any bit of attention knows already the main issue for the Session will be the budget. As the AP reported, Speaker Denney is taking the position that, "Anything that has a price tag probably won't even get a hearing." Personally, while I understand that money is tight, limiting discourse on issues that have been lingering doesn't seem to be the best idea. The reality is that only 18 of the 105 legislators sit on the State's budget committee, JFAC. So what are the rest of us supposed to do? I'm not saying bills with large fiscal notes should necessarily pass, but to not even have the discussion seems to be a bit obstructionist. What if one of those ideas with a fiscal note had some really positive changes that could help the state in the near term? We may as well have the discussion so that we can become better prepared for later. Anyway, I'll get off from that soap box for now.

I do think that we'll see a big push to shrink state government, but the budget woes will just be a handy scapegoat. It'll be curious to see if Congress sends us anything we need to take action on from Health Care Reform. My guess is yes, but I'm not sure what. In terms of the budget cuts, I am particularly concerned about the budgets for Education (including if not especially higher education) and Health & Wealth. Seeing as how I am on both of the germane committees, I tend to care more about the issues of those departments than those that serve on other committees. My interest was piqued today when I visited the Westgate H&W office and saw a sight that nearly made me cry (literally). There were at minimum 75 people waiting to apply for a litany of social services. Many of the people had looks of despair on their faces and some of shame in their eyes. These aren't the deadbeats people think about that live off the system, these are hardworking folks that have been dealt a bad hand and need help getting back on their feet. It's just not right and contrary to what some people may say, I believe that helping others in a time of need is a proper role of government (but the government shouldn't be the only one helping, more on that later!).

In terms of my work this upcoming session, as I just indicated I'll do everything I can to help others in their time of need. Frankly, that is exactly why I ran in the first place. One of the best things we can do to help others is help them help themselves. That is why I am working on a couple of bills that are intended to create jobs, which I'll elaborate more on in the coming weeks. One of them I am really excited about would help create a fund to provide capital for small startups at no expense to the state. How? Wait and see!

I will also be leading a coalition of Idaho homeless shelters in their pursuit of a two-year temporary sales tax exemption. Before you get too far down the anti exemption expressway, hear me out. The fiscal note is about $15,000 statewide (that's peanuts), but the impact is huge. Considering the fact that a lot of people (if not all) that visit homeless shelters would otherwise probably be accessing state services, I think that this is a no-brainer. Also, philosophically speaking, I believe it is important that state government not be the only one providing social services. To that end empowering the faith based and community organizations like this is a step in the right direction in my perspective.

I also have a couple of education bills that I'll be working to get through. One of them, the Mastery Advancement Pilot Project is likely to cause some discomfort, but I believe that figuring out new ways of doing things in education is past due. The idea has received some press already and hopefully will get more momentum in the next few weeks.

There are a few others that I am working on as well, including local option authority, but in the name of brevity I'll address them in the near future.

Finally in terms of length of the session, I keep hearing that the Session may be over by the first week of April. Of course, I've heard similar predictions before, but maybe they mean it this time. My prediction for an end date is April 9 (calling all bets). While this may indeed be one of the most difficult sessions in a long time, I still believe that difficult is no match for perseverance.