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Government Spending Gone Wild: California’s Record Setting Budget
California legislators and Governor Jerry Brown just approved the state’s largest budget to date at $156.3 billion, continuing the Golden State’s affinity for out-of-control spending. The budget plan, which goes into effect on July 1st, includes funding for greater preschool access, increasing welfare grants, and expanding public health care. Despite the looming $74 billion unfunded teachers’ pension liability, lawmakers even included plenty of funding for the high-speed railway.
In 2008, Californians voted in favor of Proposition 1A, approving borrowing over $9 billion to fund a high-speed railway that could take a train from Los Angeles to San Francisco in only 2 hours and 40 minutes. The ballot measure was backed by 8,000 words of legislation, now under close scrutiny. Last November, a Sacramento judge ruled that the state agency was not in compliance with the strict language of the proposition. With those funds tied up in court, the recent budget allots 25 percent of profits from the state’s cap and trade program for construction.
The budget sets the general fund, which pays for most of California’s expenditures, at $108 billion, a major 9.6 percent boost over last year. Income taxes supplied 67 percent of the general fund for fiscal year 2012-2013, and the latest budget relies on the income and sales tax increases from a November 2012 ballot initiative. These increases expire after seven and four years, respectively, which will likely leave legislators scrambling for new revenue to maintain the state’s reckless spending.
California is oft noted for its fiscal troubles, having one of the worst credit ratings of all of the states, second to Illinois. Some of these difficulties stem from not saving during times of expansion to prepare for future recessions. In an effort to change, the legislature has deferred to voters the final decision on the California Rainy Day Budget Stabilization Fund Act. If passed, the proposition would require the state’s controller to deposit 1.5 percent of general fund and capital gains revenues into the Budget Stabilization Account (BSA) when they exceed 8 percent of the general fund.This savings plan could improve California’s credit rating, but first, the state must pay down its debt. The proposition would also require that starting in 2015 and lasting until 2030, 50 percent of BSA revenues be used to pay outstanding fiscal obligations. While this might be a step in the right direction, based on current projections of general fund revenues and California’s debts, it will take decades for the state to pay its obligations and the BSA will grow at a glacial pace. With high-speed rail construction estimated to cost $68 billion and last until 2029, it’s clear that California legislators should reassess priorities and focus on maintaining financial solvency. This will require taking bolder steps toward reining in state spending and imposing real fiscal discipline in Sacramento. 0 Comments | Post a Comment | Sign up for NTU Action Alerts
Florida’s 19th Special House Election: A Budgetary Guide
In what some are calling a quiet election, there’s still a lot to be said. Though the challenges of taking drug tests have largely been replaced with who can help create the most jobs in the next five months, before the next election for the same office, Florida residents are asking the same questions of candidates as they did in Florida’s other recent special House election: What will you do in Washington, D.C.? Especially in the wake of their last Congressman, Trey Radel, who resigned after being arrested for possession of cocaine.
In just a couple of short months, three front runners have emerged to battle for the 19th District’s seat: businessman Curt Clawson (R), businesswoman and former political activist April Freeman (D), and former health worker Ray Netherwood (L). Each candidate offers different general solutions to America’s fiscal ills but details have yet to come out about how each would actually change the federal budget. However, by using a methodology similar to National Taxpayers Union Foundation’s (NTUF) BillTally project, taxpayers can see where the candidates stand on at least some of the spending issues. For this brief study, we took direct quotes and campaign materials of candidates and matched them with budget and legislative data to see exactly what the differences and similarities are.
Similar to the New Jersey Special Senate and Florida’s 13th Special House elections, details were few and far between. Even with the campaigns releasing economic plans and platform summaries, we’re still left asking what will they do if elected as the House of Representative’s newest member?
Check out the entire line-by-line analysis of all three candidates. As with NTUF’s other BillTally and campaign studies, only changes in current spending are recorded (similar to the Congressional Budget Office). The reports do not include changes in revenues or costs outside the federal government. Below are summaries of each candidates’ proposals.
Curt Clawson (R) has proposed two (out of 12) quantifiable policies that NTUF was able to score. Combined, they would decrease annual spending by $395.8 billion. The largest budget-influencing item that he supports would cap federal expenditures at 19 percent of GDP, which would be implemented using the “Penny Plan,” which would cut spending by one percent each year as long as the budget is not balanced.
April Freeman (D) has two (out of 12) policy items that NTUF could fiscally score. Together, they would increase spending by $20.203 billion each year for the next five years. Her largest quantifiable proposal would overhaul the immigration system.
Ray Netherwood (L) had one proposal that NTUF could identify. It would be to replace the current income-based tax system with a national sales tax, known as the Fair Tax. The measure would cut an average $19 billion in federal outlays for each of the next five years.
Normally, there would be some overlap between the candidates’ platforms. In the other Florida Special Election, the front runners supported increasing current spending by $180 million per year to delay a scheduled rate increase for the National Flood Insurance Program. That was not the case in this House race, although the three candidates were not asked similar questions when interviewed by the same source.
What does this mean for taxpayers and residents of the 19th District? It’s time for the campaigns to give Americans more details. While candidates are asking Floridians for their vote, taxpayers are asking for the roadmap of each candidate’s path to reach a better and expanding economy. As highlighted above and in the full report, the absence of budgetary facts and figures opens the possibility that all of the candidates could have much larger or smaller spending aspirations in mind. Clawson, Freeman, or Netherwood need only clarify their intentions with dollar figures to help complete this report and help educate Americans on important and pressing issues that we’re all facing.
Note: National Taxpayers Union Foundation is a 501(c)3 nonprofit organization. Our research efforts are intended only to educate Americans on how their tax dollars are being or will be spent by those in office, seeking office, or in appointed positions. For more information on NTUF go here.0 Comments | Post a Comment | Sign up for NTU Action Alerts
(VIDEO) Sequester-pocalypse Fear Mongering vs. Reality
Congratulations! If you're watching this video, you're one of the 312 million Americans who narrowly survived the "Sequester-pocalypse"!
Not a Fan of $1 Million Bus Stop? How about $672K?
ARLnow.com, a local news site for Arlington, Virginia, updated residents on the costs of new bus stops proposed along Columbia Pike, a major artery running right up to the Pentagon. As opposed to the $1 million prototype bus stop that I wrote about last year, Arlington County officials released an updated design with a new cost per stop: between $362,000 and $672,000. The three newly termed “transit centers” look similar to the “Super Stop” design but are shorter in height, have wider canopies, and have side windscreens. Each stop will have a different cost, according to its size:
The county provided a breakdown in costs for construction and site design and project management, with the latter representing approximately 23 percent of the total cost for the small- and medium-sized stations.
This all might be an improvement but taxpayers who answered a poll on the site say it’s still too high a cost:
Area residents questioned why existing bus stop designs (the classic three-sided, glass enclosures) are being replaced for a more expensive, unproven design (especially since the new design still does not protect those waiting from the elements. Others voiced concerns over the still-high costs. One commenter wrote that a standard stop costs $30,000 and some can cost as much as $58,000 across the border in Maryland. The question I ask Arlington Board members is, are the artsy designs of the stops worth spending millions of local taxpayer dollars instead of putting those funds towards other concerns or taxpayer relief?
On a county-level, the cost of the overall effort went from $20.9 million to $12.4 million, a 40 percent decrease. Yet, those savings may be swept away as the Washington Post just reported that the Columbia Pike streetcar – a major reason the county cites for updating the bus stops -- will cost $358 million, or $100 million more than the county’s previous projection. On top of all of this, taxpayers across the country need to keep any eye on this issue because 48 percent ($140.5 million) of Arlington County’s share of the expenses are expected to come from the federal government. The issue comes down to whether Arlington officials are doing what’s best for residents or just building pretty things that will ultimately go underused.0 Comments | Post a Comment | Sign up for NTU Action Alerts
"A fundamental imbalance..."
"...continuous growth in debt..."
The Government Accountability Office (GAO) uses all of these phrases to describe its most recent long-term budgetary projections, underscoring a less-than-ideal outlook for federal debt and deficits. GAO ran two simulations in its latest report: a "Baseline Extended" forecast, which uses the Congressional Budget Office's (CBO) legislative assumptions, and an "Alternative Scenario" that assumes revenue and discretionary spending will grow at rates closer to historical averages. Either way, GAO predicts spending will rapidly outpace revenues in the coming years:
As the graphs above show, net interest and mandatory spending programs will continue to grow as a percentage of GDP under both models, even in the "Extended Baseline" scenario which assumes tax extenders will not be renewed and discretionary spending caps will be upheld. The report also mentions looming demographic shifts that will continue to affect the nature of federal spending for years to come: by 2029, nearly 11,000 baby boomers will reach the retirement age of 65 every single day, which means much higher spending on retirement and health benefits.
The Committee for a Responsible Federal Budget has some helpful context on the GAO's assumptions, and how their projections compare to others.0 Comments | Post a Comment | Sign up for NTU Action Alerts
Sequester’s Impact: One Job Lost, $85 Billion Saved
Remember all of the doomsday predictions about last year’s compulsory spending cuts better known as the sequester? Many claimed this “draconian” measure would lead to economic catastrophe, as thousands upon thousands of federal employees would be fired and the government’s operations would come to a screeching halt. In fact, one study by Goldman Sachs predicted “declines in federal employment by around 100k over the next few quarters.”
The U.S. Government Accountability Office (GAO) has just released a study that sheds light on the actual impact of sequestration, which cut 2013 expenditures by $85 billion.
The total number of federal job losses that occurred: one.
Yes, you read that correctly. The report states that the U.S. Parole Commission “implemented a reduction in force of one employee to achieve partial savings required by sequestration in fiscal year 2013.” According to GAO, that was the only layoff attributable to the sequester. That means Goldman Sachs’ prediction of 100,000 layoffs missed by a mere 99,999.
That’s not to say that the sequester had no effect on the government. To be sure, furloughs occurred and certain activities were delayed or otherwise hindered. But the fact remains that the federal budget is rife with wasteful, duplicative, and unnecessary spending. There is ample room to pare back federal expenditures and force the executive branch to prioritize its functions. Indeed, that’s exactly what GAO found in its study: “congressional and agency actions mitigated some potential effects by shifting funds to higher priorities while deferring or reducing funding for lower priorities.”
GAO’s study once again demonstrates that the federal government remains far too bloated. While targeted cuts to unnecessary or duplicative programs are generally the best approach to fiscal restraint, in the absence of such leadership across-the-board reductions like the sequester can also work. These findings should give momentum to the advocates of a leaner federal budget and embarrass those who predicted the sequester would cause an economic collapse.0 Comments | Post a Comment | Sign up for NTU Action Alerts
Democratic Caucuses' FY 2015 Alternative Budget Plans
In the newest edition of The Taxpayers Tab, National Taxpayers Union Foundation (NTUF) compared the alternative budget proposals put forth by Congressional caucuses including the Republican Study Commission (RSC), the House Republicans, the House Democrats, the Congressional Progressive Caucus (CPC), and the Congressional Black Caucus (CBC). We looked at each budget's top-line numbers relative to the Congressional Budget Office's baseline projections for 2014 to give taxpayers an idea of how each of these budget alternatives differ from each other and the current budgetary forecast.
There were several alternatives offered from the Democrats:
They differed in a few key ways:
The Democrats' budgets focus primarily on responding directly to the country's poor economic conditions, both by increasing eligibility for entitlement programs and providing increased funding for job training and development. In general these proposals would be offset by more and/or higher taxes, but none of these plans project a balanced budget within the next ten years.
For more, check out NTUF's full analysis in The Taxpayer's Tab.0 Comments | Post a Comment | Sign up for NTU Action Alerts
In the newest edition of The Taxpayers Tab, National Taxpayers Union Foundation (NTUF) compared some of the alternative budget proposals put forth by several Congressional caucuses, including the Republican Study Commission (RSC), the House Republicans, the House Democrats, the Congressional Progressive Caucus (CPC), and the Congressional Black Caucus (CBC). We compared the top-line budget numbers from each proposal relative to the Congressional Budget Office's baseline projections for 2014 to give taxpayers an idea of how each of these budget alternatives differ.
This first of two posts will focus on each of the GOP alternatives.
Some notable points:
While the two GOP budgets are similar in that their ultimate goals are balanced books, the RSC plan would try to achieve that within a much shorter timeframe. In both cases, emphasis is placed on cutting discretionary spending rather than any wholesale or fundamental reforms of mandatory entitlement programs.
For more, check out NTUF's full analysis in The Taxpayer's Tab.0 Comments | Post a Comment | Sign up for NTU Action Alerts
As tax day approaches, lawmakers in various Congressional caucuses have been unveiling their own alternatives to the President's Fiscal Year 2015 budget proposal. In this week's edition of The Taxpayer's Tab, NTUF looked at proposals from the Republican Study Commission (RSC), House Republicans, House Democrats, the Congressional Progressive Caucus (CPC), and the Congressional Black Caucus (CBC) -- in addition to President Obama's own budget -- to see what their policy priorities could mean for taxpayers.
For more on these alternative budget proposals and how they compare to each other and the President's proposals, check out the online edition of The Taxpayer's Tab.0 Comments | Post a Comment | Sign up for NTU Action Alerts
Senate Advances Ukraine Aid Package - What's Really in the Bill May Surprise You!
Yesterday, the Senate moved forward with S. 2124, the “Support for the Sovereignty, Integrity, Democracy, and Economic Stability of Ukraine Act of 2014.” As the name suggests, S. 2124 is an aid package for embattled Ukraine that includes measures legislating loan guarantees, sanctions, security assistance. But that’s not the whole story.
S. 2124 also contains some significant changes in the U.S. relationship with the International Monetary Fund (IMF). Under the misnomer “reform” the changes were first announced in 2010 by the IMF, but until now, Congress has declined to enact the modifications that the Obama Administration supports. The so-called reforms call for a doubling of our annual funding quota along with a major change in the rules for election of the IMF executive board.
Currently, the U.S. appoints our own representative to the executive board (the group tasked with day to day IMF decisions). Under the 2010 proposal, all members of executive board would be elected by the Board of Governors, which is comprised of representatives of each IMF member country, making it harder for the U.S. to protect our interests. Having a U.S. representative at the table is an important accountability tool for American taxpayers who provide the majority of IMF’s funds, $64.5 billion annually.
The U.S. also contributes the lion’s share of funds to an IMF account called the New Arrangements to Borrow (NAB). So far, taxpayers have committed $106 billion (18.7 percent of total NAB) to what was supposed to be a temporary, emergency program. Under the proposed 2010 plan, that would be half-true. NAB is going away, but the high price tag is here to say - shifted back under our overall IMF quota and putting taxpayers on the hook for an additional $63 billion a year. In addition, subsuming NAB funds into the general quota eliminates our veto on crucial IMF decisions
For taxpayers, the IMF reforms mean a lot more money for a lot less influence in how that money is spent. Any way you split it, that’s a terrible deal. Unfortunately, with the focus on Ukraine, the IMF changes aren’t getting the consideration they warrant.
Before agreeing to give billions more to the IMF, lawmakers should be mindful of some big picture concerns. For instance, the IMF suffers from severe democratic deficiency, not unlike the U.N. and other global entities the U.S. is involved with. Without the ability to vote on IMF decisions, taxpayers and U.S. lawmakers alike have little influence on IMF decisions. Taxpayers should have a say if their funds are to be used to bail out sovereign states such as Greece and Ireland. As it stands, the hundreds of billions of dollars taxpayers have entrusted to the IMF over the years have funded Communist regimes, contributed to fiscal irresponsibility, and increased moral hazard. By doling out credit at rock-bottom prices, the IMF provides little incentive for recipient countries to the reforms they need to avoid economic catastrophe.
Then there is our own national balance sheet with a debt to GDP ratio of 73 percent and on track to hit 100 percent in the next 25 years unless Congress takes action to address out of control entitlement spending and enacts pro-growth policies. In light of our ongoing economic challenges and poor fiscal outlook, lawmakers should prioritize funding domestic needs.
Finally, it’s unnecessary to logroll IMF reform with Ukrainian aid. With an estimated $400 billion available, the IMF doesn’t need a new injection of taxpayer backed dollars to meet global needs and commitments. Our relationship with the IMF is one that deserves reexamination and the close scrutiny of stand-alone legislation debated on its own merit.0 Comments | Post a Comment | Sign up for NTU Action Alerts