Cost Avoidance #7,9: Use Cash On Hand
October 3, 2017 - 1:48pm CDT
#7, 9) Use Cash On Hand: Spend unbudgeted revenues and excess funds in the CIRB account before considering tax hikes
Some politicians tell us they want higher taxes on cigarettes so that fewer people smoke, and higher taxes on businesses and earnings because tax rates don’t matter. Of course, when you tax a thing more, you get less of that thing—it’s just basic economics.
Raising taxes always increases the tax burden on somebody and reallocates wealth away from those who have earned it. This is why taxes should be low. And before politicians even consider raising taxes, they should spend the money they already have.
When the legislature writes a budget, it is not allowed to plan to spend all expected revenues. Because of that, and because tax receipts have been slightly above predictions so far this fiscal year, the state does have a small and growing surplus outside of the funds it will not receive due to the invalidated tobacco tax hike.
The state also holds various funds with balances that tend to carry over year after year. In prosperous years, many of these funds should be left alone. But with the state still struggling with low oil prices, it is better to spend cash on hand than to permanently implement damaging tax hikes.
Instead of raising taxes, legislators should consider spending surplus certified cash ($83 million) and accessing the CIRB account (over $100 million).
The complete list of options to bring state government’s current budget into balance without raising taxes is here.