The Budget Surpluses Challenge Us To Manage Our Own Affairs
by David Morris
March 13, 1997 – published in St. Paul Pioneer Press
How glorious to be a state legislator these days. Budget surpluses in 48 of 50 states. Eight states with surpluses that exceed l0 percent of their budgets. A strong economy that continues to drive surpluses skyward. Last November Minnesota officials projected a two year surplus of $1.4 billion. In February the figure jumped to $2.3 billion. And for the first time the state concluded that surpluses might continue well into the future.
What should states do with this most welcome windfall? Many are planning to give almost all of it back to their taxpayers. “It’s the taxpayers’ money,” legislators explain. Not surprisingly, the taxpayers themselves take a more long term and sophisticated approach to managing the affairs of state. A recent poll by Elway Associates found that 69 percent of the voters in Washington want to use that state’s surplus either to pay for programs that have been cut or to build up a rainy day account. Less than a quarter want the surplus to be used to reduce taxes.
The average person knows that giving every household a few hundred dollar tax rebate won’t strengthen the state economy nor will it lay the foundation for a better future. A wiser strategy would be to invest in programs with a proven track record of generating large social and economic returns. Perhaps the biggest payoff of all would come from a bold investment in our children: daycare, prenatal and child health care, nutrition, early education.
Consider as a case in point the 30 year old Head Start program, perhaps the most analyzed social enterprise in American history. Dozens of studies show that for every dollar invested in Head Start, society saves $3 to $7 because of reduced teen pregnancy, reduced poverty and reduced crime.
Yet despite overwhelming scientific evidence and significant bipartisan support, Head Start programs are so underfunded that only a minority of those who qualify for them can get in. In the Twin Cities, only one child in five who qualifies is able to enroll.
In an era of budget surpluses, why not achieve the full long term savings that a program like Head Start promises? Republican Governor Voinovich of Ohio has stepped up to the plate on this by calling for full funding of Head Start in his budget. Yet in Minnesota the Governor’s proposed increase would still prevent half of the qualifying children from getting in. Why so stingy? Full funding in Minnesota would require an additional $50 million a year, a tiny fraction of the surplus.
Investing in the next generation should be one top priority for using our budget surplus. Meeting our responsibilities should be the other. This is a defining historical moment. Last year the federal government abandoned its long term responsibility for the needy. Now Congress says it is up to states and localities to help our neighbors. In Minnesota, the new federal law eliminates food stamps for about 16,000 legal immigrants and social security payments to some 11,000 disabled elderly and children. The tab for caring for these people comes to $40-70 million a year.
Making child care accessible to all low income and working parents would allow thousands of Minnesotans to become productive workers. The cost? About $40 million a year.
The way we spend our budget surpluses reflects our values and our vision. By spending at least 25 percent of our surplus on our children and our needy, Minnesotans would be making a powerful statement about what we think is important and what we think is just.
And what about returning some of the surpluses directly to the people? Fine by me. But even here the politicians more often than not are doing it wrong. They plan to give most of the money to those who need it least. Minnesota’s Governor proposes an income tax cut that would result in sending a $1200 check to someone earning $100,000 a year, a $190 check to someone earning $25,000 a year, and nothing at all for someone living in poverty.
Why not return the money to everyone equally? After all, everyone contributes to the well-being of the community, old and young, rich and poor, employed and unemployed. Returning the surplus should be done in a way that ties us together rather than drives us apart.
The way we respond to these enormous budget surpluses could mark a defining moment in American history. Are we up to the challenge? Can we think long term? Will we take care of our own? From New York to Washington, from Minnesota to Arizona legislatures are answering those questions. We have been presented with a marvelous opportunity to show Washington that we can manage our own affairs responsibly and ethically. Let’s not squander that opportunity.
David Morris is vice-president of the Institute for Local Self-Reliance