When it's rainy every day...

Ray Burrsma, of the Holland Sentinel, had an opinion piece yesterday which lambastes the Michigan legislature for cutting taxes several years ago when we had a surplus of tax money. He feels that, instead, we should have saved for future lacks of funding like the one we currently are experiencing.

It's a nice thought, but it assumes the legislature has one important quality that is in small quantity amongst politicians: self-restraints.

The principal advantage of the Engler tax cuts is that it prevented runaway spending from getting even worse. Mr. Burrsma attacks those calling for spending cuts without realizing that if we did not cut back on taxes several years ago, the spending would be even higher and even more dramatic cuts would be required. He imagines that no one could find places in the budget to cut.

Hard cuts are required. By definition, they won't be easy. A good place to start, though, would be to insure that the compensation that is paid out for contracts and state employees is comparable to what is paid in the private sector. It should be shocking that the state, with its size and the amount of contracts that it puts out, should be paying even the average amount for contractors. The fact that the law forces the state to pay 20-30% over the private sector average is criminal. Allowing unfettered competitive bidding will dramatically cut the cost of state contracts. Also, why is the state still providing a complete pension? In the private sector, those have been nearly completely eliminated. Why not do the same at the state level and switch everyone over to a self-funded 401(k)? The state could pitch in a small amount for a short while, but the pension costs are prohibitively expensive. Also, this would be a better deal for workers who could invest in stocks instead of just very low risk bonds.

All in all, while saving surplus funds might bail us out of trouble in the short term, responsible budget cuts will keep us out of trouble in the long run.

We failed to save for a rainy day
Holland Sentinel

Good economic times come and go. The economy waxes and wanes. It grows hot but eventually cools. Then the cycle repeats. Hot. Cold. Again and again. Over and over.

The state of Michigan's revenue correlates with Michigan's economy. When the economy is strong, revenue is high. When the economy is weak, revenue dips.

Obviously, then, our state government's income varies from year to year. It has more money when the economy thrives and less when the economy waffles.

State expenditures, on the other hand, are relatively constant. From year to year the state funds similar numbers of Secretary of State offices, State Police posts, K-12 students and so on. Yes, there are variations, but they are minor relative to the state budget.

Now, if we know our expenses are constant but our revenues vary, what is the prudent course to take? Ask any good Hollander from the mid-1900s and he will tell us. We establish a surplus when times are good so we can weather the bad times. Anyone who has read Joseph's interpretation of Pharaoh's dream in Genesis understands the concept. Save during times of plenty for the time of famine.