Posted by JM Ashby
A variable that is sorely missing from the budget debate, not just locally, but nationally too, is revenue. If you don't have the revenue to keep up with the current status quo, you can never hope to keep up with the future.
Federal income tax receipts are currently at their lowest level since 1950 and states are also grappling with low revenue due to high unemployment and endless tax cuts for corporations and the wealthy. The budget cuts you see popping up now all around the country will not solve this problem, they will only exacerbate it.
(Reuters) - Revenue forecasts made by America's state governments are increasingly missing the mark, a trend that is aggravating political, fiscal and social pain as most of the 50 states grapple with budget shortfalls, according to two leading think tanks.
The widening mistakes in revenue forecasts, which added up to $49 billion in fiscal year 2009, were due more to shifts in the economy than to wrongheaded experts.
"The main cause of the increase in volatility appears to be the state's growing reliance on income taxes and the ways in which highly volatile capital gains affect income tax revenue," the Pew Center on the States and the Nelson A. Rockefeller Institute of Government said in a new study.
If you make cuts to healthcare, more people will turn to emergency rooms. If you fire someone who had a well-paying job, that person is now on unemployment, not paying taxes, and not shopping at local businesses. If you close a school, every person who worked there is now unemployed, not paying taxes, not shopping, and parents will have to drive twice as far to drop their kids off at another school. People who are unemployed eat out less, shop less, and travel less.
Its a economically-depressing chain-reaction that Republicans seem intent on stoking.