In the normal course of events, deficit spending can be avoided by strategic budgeting. Tax bases are built on a three-legged stool of income, property, and sales taxes. Things go wrong at moments like this, when tax revenue collapses. During times of mass unemployment, income and sales taxes crater as citizens have no income and aren’t spending. Budgets based on predicted income levels are thrown into deficit, forcing immediate cuts.
It’s a terrible way to
govern, but it’s entirely intentional. Those who oppose the size of
government recognize moments like this are a great opportunity to force
austerity. Since raising taxes is always hard, these laws function like a
ratchet: funding drops a notch or three during crisis and is frozen at
that level until the next crisis, when the ratchet turns down again.
States have had some tricks to manage this, like failing to fund pensions, ignoring routine infrastructure spending, moving money around, and adding fees (we’ve become heavily dependent on fees, which are easy to create, to augment lost tax revenue). But at some point schools just start falling down and bridges collapse. The wave of school teachers striking is a consequence of this process, because it’s easy not to skip cost of living raises for state workers here or there and buy a bit of time. But many teachers had fallen so far behind it was laughable.
For something like six to twelve weeks, states are going to see their economies freeze, with after-effects lasting months. This will cause revenues to drop catastrophically. I haven’t seen any projections, but it seems like 15-30% would not be an unreasonable guess. That means cuts to services—schools, social workers, cops, firefighters, road crews, etc etc—will need to be cut 15-30%. (Some states have modest rainy-day funds; few will be prepared for a crisis of this magnitude.)
This was intentional. It was the express (if not spoken) function of these laws. We as citizens have chosen them. We may not have said, “I want giant potholes and crappy schools,” but that’s what you get when you prioritize low taxes above everything else. My hope is that, once we get on the other side of this crisis, we begin to reconsider the deeply conservative approach to governance that has removed major pillars of the social safety net that protect people in emergencies like this.
States have had some tricks to manage this, like failing to fund pensions, ignoring routine infrastructure spending, moving money around, and adding fees (we’ve become heavily dependent on fees, which are easy to create, to augment lost tax revenue). But at some point schools just start falling down and bridges collapse. The wave of school teachers striking is a consequence of this process, because it’s easy not to skip cost of living raises for state workers here or there and buy a bit of time. But many teachers had fallen so far behind it was laughable.
For something like six to twelve weeks, states are going to see their economies freeze, with after-effects lasting months. This will cause revenues to drop catastrophically. I haven’t seen any projections, but it seems like 15-30% would not be an unreasonable guess. That means cuts to services—schools, social workers, cops, firefighters, road crews, etc etc—will need to be cut 15-30%. (Some states have modest rainy-day funds; few will be prepared for a crisis of this magnitude.)
This was intentional. It was the express (if not spoken) function of these laws. We as citizens have chosen them. We may not have said, “I want giant potholes and crappy schools,” but that’s what you get when you prioritize low taxes above everything else. My hope is that, once we get on the other side of this crisis, we begin to reconsider the deeply conservative approach to governance that has removed major pillars of the social safety net that protect people in emergencies like this.
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