Budget Cuts

Friday, April 16, 2010

Via HBL, I have learned about a headline that made my day: "Strapped City Cuts and Cuts and Cuts." (A subscription is required to view the full article. More details about the city's financial situation can be found here.) This was on the front page of the Wall Street Journal earlier this week, and it is encouraging news for anyone who advocates a return of government to its proper scope.

Like many American cities, this one [Colorado Springs --ed] is strapped for cash. Tax collections here have fallen so far that the city has turned off one-third of its 24,512 street lights.

But unlike many cities, this one is full of people who are eager for more government cutbacks.

The town council has been bombarded with emails telling it to close community centers. Letters to the local newspaper call for shrinking the police department and putting the city-owned utility up for sale. A commission is studying whether to sell the municipal hospital. ...
It's nice to see that there are at least some areas with the political will to reduce the size of the government.

Although I have not seen the whole article, I will note that other excerpts I have seen indicate that many of the residents there generally favor small government as opposed to proper government. (Many see paving streets as a proper function of the government, for example.) Nevertheless, it's encouraging to be able to say, "It can happen here," and be talking about turning the tide against government expansion for a change, rather than alluding to the Sinclair Lewis novel about dictatorship coming to America.

-- CAV

9 comments:

Richard said...

That sounds great except why did they target shrinking the police department? There's so many other things they could ditch first...

It's troubling the police are still the first thing to get chopped rather than say, the state grants for laughable artists to make garbage no one wants. Still lots of room for improvement.

Gus Van Horn said...

I agree that the police cuts were hardly the right place to start.

Yes. There is lots of room for improvement.

Realist Theorist said...

Our city cut 10% of its staff. Our school district is planning to shut 3 of its 12 elementary schools, with teacher cuts. The cities around us are all doing the same.

Hundreds of cities are cutting budgets in the wake of falling tax "revenues". A few links on the topic: L.A.,Sacramento, New Jersey schools,

Despite the stories from around the country, municipalities are really only just making dents, not taking fundamental action. For instance, many of the school districts ought to be cutting wages, but they are tied by union contracts, and therefore have to cut staff. Also, this process might have started a year ago, but a lot of "stimulus" money went to the states and ended up subsidizing city-level jobs.

Meanwhile, public pension funds appear to be about $2 trillion in the red.

Gus Van Horn said...

RT,

You seem to be taking my post as unrealistically optimistic, which is not the impression I had intended to give.

As you point out, state governments and municipalities around the country are making only nominal budget cuts. Indeed, even when such cuts might sound "drastic" to most people (like closing a quarter of a district's elementary schools), they are nowhere near enough and they can't be because, in this case, the whole premise behind public education would have to be in question among a large-enough portion of the electorate before there would be political will to get the government entirely out of education. Governor Christie's cuts are at once particularly annoying because he seems to be held out in some quarters as some kind of capitalist, and frustrating because even they are meeting enormous resistance.

All that said, I was focusing here on the fact that the citizens of Colorado Springs, however imperfectly, were demanding more cuts, including for things (Like community centers) that I could not imagine residents of certain states (like Massachusetts) wanting closed.

I certainly do not see what is going on in CS as evidence of some genuine move towards laissez-faire.

Although I am surprised that a reader could come away with such an impression, I am glad you brought up the points you did.

Even if the whole country had an electorate as enthusiastic about cutting back as Colorado Springs, we'd have a long way to go, intellectually, in the fight for full political protection of individual rights.

Gus

John Mercier said...

Is there a way to get a share button on your blog for facebook?

Realist Theorist said...

Didn't mean to give the impression of reading any undue optimism into your post. Just wanted to share some other similar stories from other cities.

Whatever they're cutting, I'll take :)

I wonder if voters will resist tax-increases. It would be ironical if the Democrats now take the GOP idea of a "fair tax" and implement it, while keeping the income tax unchanged!

Gus Van Horn said...

John,

Thanks for asking. You reminded me that I meant to address that problem long ago.

There's a new widget inserted on the permalink for each post now that should help you out. Let me know how that works.

RT,

No worries.

As for the "Fair Tax," that's just about the only way it could be enacted since by some estimates it would take a 57% rate to replace the income tax entirely.

Whatever the outcome, something will have to give. I have a bad feeling that it will be the value of the dollar.

Gus

Park said...

RE tax cuts, I must regret to inform you that the dam has already broken. The estate tax, for one, is going to come back at 50 or 55% with only a $1m & change exemption (2009 it was 45% and $3.5m exemption). The marginal rates on ordinary income are moving from 35 to 39.4% for the top bracket, and 32 to 36 for 2nd bracket, and 28 to 31 for the third bracket. Many deductions and credits are going away, effectively raising taxable income for millions. Medicare/medicaid taxes are going to triple from .9% to 3.1% for earners over 200k on certain income. The capital gains rate is going from 15 to 20%, the "qualified dividend" is going away (dividends will again be ordinary income instead of 15% capital gain). Certain kinds of capital gain are getting higher rates, too. On top of this, numerous federal excise taxes are being levied or raised on things such as health insurance. Congress is proposing changes to subchapter K I don't even want to begin explaining (partnership and LLC taxes). Add in the proposed surcharge on currency transactions, the "bank tax" and "bailout responsibility fees" that are being bandied about, and you have yourself one heaping portion of new, improved, and raised taxes.

These are just federal changes already implemented or already being discussed, without accounting for state tax changes or any additional gems of economic wisdom ginned up by the morons in DC to finance their fascist pipe dreams. So, the horse is already out of the barn on voter opposition "tax increases," as we missed that boat back in 2003 when all these "reversions" were built in. And that, Realist Theorist, assumes that the ordinary voting joe would care, seeing as how almost all modern tax burdens are directed against high earners, usually with floors. For example, the AMT, which btw is not indexed for inflation and is therefore *always* growing in scope, is only applicable to people with adjusted gross income in the 70k+ range. 200k and 250k also seem to be popular numbers. This is on purpose, of course: Eat the rich, as they say.

Basically, it's going to be a few good years to be a tax lawyer, accountant, or adviser.

Gus Van Horn said...

Park,

The changes you discuss versus what is "doable" in the opposite direction in today's optimal circumstances indicate a major point that needs driving home by cultural activists: That eating the rich is like eating seed grain.

Thanks for mentioning that.

Gus