In their recent Flathead Beacon guest column, Montana House Republican leaders refuse to take responsibility for the state’s current budget crisis by claiming that we have a spending rather than the revenue problem.
These Republican luminaries claim we are simply spending too much money, and to prove it, they cite the fact that since 2012, general fund revenue has risen 14 percent while spending is up 32 percent. That sounds bad, but by themselves, the numbers don’t necessarily mean we are spending too much. They may simply mean we are raising too little revenue. More to the point, over a longer period of time expenditure and revenue growth must track each other very closely, simply because we must balance the budget. Spending and revenue must equal each other.
If a short-term imbalance between spending and revenue can’t tell us where our “problem” lies, what can? The answer is to compare the size of the budget to the size of the economy. We have a spending problem if we’re spending more than we need to or can afford, given our income and the productivity of the state’s economy. And we have a revenue problem if the revenue we are collecting falls behind what we can afford and is needed to fund essential programs.
The productivity of the state’s economy is best measured by gross state product, which is basically the total value of everything that we produce in the state and, ultimately, the source of our income. And the fact is that the growth of state spending and revenue has fallen significantly behind the growth of gross state product. There is no indication that we have spent beyond our means; on the contrary, we could afford to do more, and we certainly can afford to do what we are doing now.
The House leaders claim that 14 percent growth in revenue since 2012 must be enough because “Most Montana families have not seen their income grow by 14 percent since 2012.” But the comparison of total tax collections to individual family incomes is meaningless. What is instructive is the fact that while total tax collections were rising by 14 percent, total personal income rose by 19 percent.
Republicans intend this prattle about a “spending problem” to absolve them of the responsibility for finding a reasonable solution to the current budget crisis. But if they think we are spending too much money, they have only themselves to blame. After all, the budget is built by the Legislature where Republicans hold the majority. But instead of blaming themselves, they’re expecting Gov. Steve Bullock to solve the problem they created.
Sen. Dick Barrett