Interesting column today in the Seattle Times by Joni Balter on taxes and state budget problems. The focus of the article is how politicians in Washington claim if only the state had an income tax there wouldn't be any budget problems and how politicians in Oregon claim the same if only their state had a sales tax. Of course, as Balter points out, California has both and look at where that's left the state.
Here is the conclusion of the column:
There is one way to avoid catching the budget flu, however: spend ! healthier (more responsibly) and not stay up all night binging away your savings.
Regardless of how you slice up the tax structure, states need to use a “three-legged stool” of sound budgeting:
- Meaningful spending limit;
- Protected 10% reserve account (so you don’t have to resort to tax increases or deep spending cuts in the bad times); and
- Limiting base expenditures to core functions within the revenue forecast.
Here are the types of questions that should be asked before any activity receives taxpayer money:
- Is the activity a core function of government or commercial in nature?
- If it is a core function, can the service be provided more efficiently and effectively through competitive contracting?
- Does it provide a broad public benefit or only serve a special interest?
- Does it duplicate the activities of non-profits or other private initiatives?
- Does it duplicate the efforts of other state agencies or programs?
- Does the activity demonstrate quantifiable performance?
In fact, you could say that asking and answering these questions combined with utilizing sound budgeting tools is the equivalent of taking budget Tamiflu to head off the cyclical "economic flu" season.