Monday, May 22, 2006

Top Ten Reasons I'm Not TELlin'

In comments to this post, my friend (and phriend) Jill pleads for "a clear, concise, layman's version of what TEL says and what it means." Whll here at the Pages, we'll take a stab at clear, though we never do concise. I've been studying TEL for over a year now. One reason it doesn't admit of "clear and concise" arguments is that the TEL proposal has so many defects. Happily I can fall back on the old saw in politics a voter doesn't need to accept all the arguments against an issue to vote no; only one. So here are my ten favorites.

(Unfortunately my main source, the Coalition for Ohio's Future apparantly is having website problems. I'll update with links when things are back up.)

1. Inflation is not inflation is not inflation. The TEL formula restricts spending to the percentage in the consumer price index, plus population growth (or 3.5%, whatever is greater). Problem is, the CPI is based on the “basket of goods” that consumers buy, not the one that governments buy. In particular, little in the basket reflects the rapid rate of cost inflation in medical services and pharmaceuticals. Over 20% of the state budget is Medicaid. A substantial proportion of what’s left also involves providing medical services, whether in the form of health insurance for employees or medical care for people in state custody. The 3.5% growth rate allowed under TEL is a fraction of the 10-20% inflation in medical expenses that can be anticipated in any given year. This flaw in the formula is responsible for much of the mischief TEL causes. If TEL proponents have an answer for it, I haven’t heard it.

2. The TABOR trainwreck in Colorado. Coloradans – not exactly a wild group of lefties – released the state from the bonds of TABOR for a reason. It was bringing hell upon Colorado. Not only did TABOR require cuts in programs the middle class could ignore like childhood immunizations, it affected core areas like K-12 education and road and park maintenance. And despite what TABOR proponents claim, Colorado’s growth rate during the TABOR period was no better than the surrounding states.

3. The stated rationale is not true. Blackwell claims we need TEL to give “space” for reforming the tax code. Wrong on both counts. We don’t need to reform the tax code – it was reformed last budget cycle, though J.Ken pretends it wasn’t. And the GA didn’t need “space” for that reform.

4. Slashing funding is a dubious growth strategy. When the government cuts taxes and cuts spending, it is putting money into the economy (the tax cut) but is also taking money out of the economy (less spending) Not to put to fine a point on it, a government job is a job. While the public sector work force has been declining the last few budget cycles, we haven’t seen a commensurate rise in private-sector employment. I don’t advocate putting the world to work leaning on shovels, but pretending that the government is a nonplayer in the economy is equally na├»ve.

5. TEL doesn’t allow growth in non-tax revenue without offsets. Sometimes the government does things that pay for themselves directly – a new program at a University, for example. TEL doesn’t allow the growth of fee-for-service programs without offsetting costs elsewhere. Ironically, one of Blackwell’s real accomplishments as Secretary of State was to shift the costs of business registration from taxpayers to the businesses that benefit. Blackwell claims TEL wouldn’t affect such programs. He’s lying.

6. The Reverse Robin Hood Effect. Under TEL if the government takes in more money than it can spend, it must give back the excess pro rata based taxpayers’ income tax rates. But much of the money may be from sales taxes. We know that poor people pay a greater percentage of their income in sales taxes and we know that people who pay no income tax nonetheless pay sales tax. TEL would take excess revenues, including sales tax receipts, and distribute them only to people who make enough to pay income tax. No one knows how big the redistributive effect is, and certainly it’s not large. But if redistributing money from rich to poor raises philosophical quandaries, doesn’t redistributing from poor to rich simply tar a system irreparably?

7. A litigation bonanza waiting to happen. TEL lets pretty much anyone sue the government for not following its mandates. Given how poorly worded the provisions are, a dozen or more court cases will be necessary just to hash out what it all means. Even after that, plaintiffs have a low bar to bring a lawsuit.

8. Saving money by wasting money, pt. 1 special elections. Anytime a local government bumps up against the TEL ceiling, it must go to the voters for a special referendum to allow it to spend above the cap. Mind you, they must do so even if they have the money. Running an election isn’t free. Coloradans voted on over 1000 local ballot measures over the life of TEL.

9. Saving money by wasting money, pt. 2, the TEL bias against modernization. Modernization of any sort requires a capital expenditure. That is, it requires spending extra money over time to bring up to date the computer network or climate control system or bridge or whatever it is. The reason for doing it is obvious; the new whatever is better, more efficient and saves money. Conversely, if you can’t modernize because the TEL won’t let spend anything beyond basic operations, you can’t save the money over the long run.

10. That crappy ballot language. Again TEL proponents claim otherwise, but the language certainly sounds like it requires a majority of the registered voters to vote yes in a local election to exceed the spending limits. By claiming that it doesn’t, Blackwell at least admits that would be a bad thing. But he won’t admit that a court could go that way given how TEL is worded.


scott bakalar said...

Only Jill could ask a question like that.

Only Pho could lay it out for a lay-man (or woman) like that.

Thanks to the both of you.

Jill said...

Cackling. Thank you Pho for this AWESOME post and thank you Scott for the compliment. See my post today re: you can't keep a good question down.