It’s always easier for electeds to cut taxes, but not spending.
Conservatives are screaming mad about Congress passing a $1.3 trillion “Omnibus” spending bill for fiscal 2018. It includes paltry funds for President Trump’s border wall, massive increase in social spending, but does fund the U.S. military properly and ends sequestration.
One wonders how the economy is going to handle the recent tax cuts and this increase in spending.
But despite the protests and finger-pointing, the sad reality is that fiscal conservatism and the 1980s mantra of “spending cuts before tax cuts” is not only out the window in Washington, but in Virginia, too.
It is easy for national politicians to cut taxes and just let deficits balloon. On the local level, where we have to have balanced budgets, the game that is played this time of year is to cut the rate on local property taxes, but if your home or building value increases, your tax bill is higher. Most of Virginia is growing nicely, so we do not have too many situations where police officers and teachers have to be laid off. State government keeps growing, too!
In my 10 years serving in local office in Loudoun County, I can only remember two times when spending was cut – and that happened with Democrats in control, not Republicans.
In 2009, a Democrat-controlled Board of Supervisors was forced to cut some $40 million out of the Loudoun County operating budget due to the massive drop in home values following the real estate and market collapse of 2008. Staff was cut and even a pet project of liberals, the Loudoun Museum, was hacked from some $200,000 a year to $50,000.
The following year, in Leesburg, our then Town Manager, John Wells, proposed a lean budget that led to layoffs of staff, too – including the director of the Leesburg Airport. Our council was split three Dems, two Republicans (including me) and two Independents, but we agreed to the cuts and kept the tax rate low.
In most other years, I found it next to impossible to get folks on the Council or the Board of Supervisors to cut anything I was even mocked when I seconded motions by my colleague, former Sterling Supervisor Eugene Delgaudio, to cut things. It is very, very difficult for politicians at all levels of government to go “against staff.”
Here are other reasons why it is so hard for politicians to cut spending:
- Federal and state mandates. Republicans love to support “home rule” in theory, but the reality is that the fastest growing sector of government in this country is NOT the federal government, but local and state governments -and lot of it is due to unfunded mandates – my favorite being the 2009 Executive Order President Obama issues forcing Chesapeake Bay states (like Virginia) to install controls on municipal runoff. To my knowledge, President Trump has yet to cancel this unfunded mandate and the Omnibus bill blocked his attempt to defund one facet of it
- People want government programs, but lower taxes! People vote for candidates who support schools funding, transportation funding, Defense spending, Social Security. Campaigns are won on slogans, sound bites and easy messages. Politicians have to “bring the bacon home to their districts.”
- It’s hard for politicians to know what to cut; the bureaucrats rule. Politicians are not experts in all matters that come before them; but the bureaucrats and constituents of these programs (through their lobbyists) ARE EXPERTS. Even with state auditing arms and federal watchdog agencies like the Government Accounting Office and Inspector General, government spending still keeps unabated because it is so difficult to “go against staff.”
- Politicians do not scrutinize budgets, nor do they have good B.S. detectors. On the Leesburg Town Council, we got the details of line-items in the town budget, but were never furnished this while I served on the County Board. I asked for it once, and it was a computer printout that made it impossible to find where money was being spent. I often wondered if that was deliberate by the wily ex-CFO of the County to keep the wool over our eyes.
- It is hard to get a majority to support cuts. Politicians seem to oppose what their colleagues want, but not what bureaucrats and special interests want. For example,in 2010, I succeeded in cutting back Leesburg’s excessive street resurfacing budget by $150,000 (out of some $2 million). The following year, the Public works director came to Council with the storyline that due to the winter storm, we needed that money back. So, the council restored it. I, and another colleague, voted “no.”
Another example. Dog lovers and bureaucrats wanted a $15 million animal shelter to replace one that is in the rural west of Loudoun, but in a hard-to-reach area of Leesburg. I got a majority on the board to look at existing buildings to rehab in Eastern Loudoun, closer to the populations the shelter would serve. Supporters of the new shelter on our –all Republican Board fumed. But staff identified some buildings that could work. None of the owners, however, were contacted to see if they would be interested in selling. So, the Board _ voted for the $15 million shelter
Now, imagine how hard it is to get a majority in a 100-member House of Delegates 435- member Congress, to cut something?
- Don’t cut my program, cut the other guy’s program. Ronald Reagan was fond of saying: “Don’t tax him, don’t tax me. Tax that fellow behind the tree.” But today, it’s “Don’t cut my program – cut someone else’s.” This is because every government program has a constituency that can be mobilized (even by bureaucrats surreptitiously) to fight a politician’s effort to cut them back.
For example, in 2009 and 2010, I tried to get the Town Council to cut funding for the Thomas Balch Library, a former county library that Leesburg took over in 1993 and turned into a “genealogy and history library.” Over the years, its staff grew to five full timers and four part-timers and a budget of $450,000 a year, about 1 cent on Leesburg’s tax rate of about 19 cents/$100 of assessed value. However, this library gets fewer than 20 patrons a day, most of whom do not live in the town. No federal, state or county aid is available. So, the library director, worried about losing her job, mobilized the “Friends of the Thomas Balch Library” to breath down the Council’s neck. It was never cut. In fact, the Library was bequeathed about $700,000 from a wealthy volunteer in 2009 and the money has not been used at all. The council will not step in either.
I don’t mean to cast myself as the lone fiscal conservative in Loudoun. But the reality is that it is very hard to get politicians to cut programs or staff unless they are pressured to do so due to a failing economy or if the bureaucracy gives its blessing. In DC, future generations will pay for this debt through higher interest rates. And the debt in Loudoun and other Virginia cities and counties is growing, too.
So, fiscal conservativism is dead and to borrow from P.J. O’Rourke, we’ve all been“thrown under the Omnibus.”
24 comments
Ken,
I’ve read and pondered your examples.
The Chesapeake deal is an unfunded mandate that the Fed gave Dept of Environmental Quality to power to uphold. DEQ forced these regs onto counties, towns and cities, they have to come up with the funding to enforce (hiring the dirt nazi).
The personal experiences that you discuss are part of you being a fiscal conservative but more than that you are reasonable in its simple form.
Fiscal Conservativism seems to be a campaign talking point and reasonable thought or actions appears to have been elusive to many of our Representatives ( both sides).
It is a campaign talking point, and you can be a fiscal conservative if you vote for tax cuts or don’t vote to incrase them, while sitting back and watching spending explode. Politicians trying to make cuts, except with their backs to the wall (i.e. fiscal cliff or a bad economy), is like pushing a lawnmower up a mountain. You wind up with lots of backaches and can’t mow the lawn much. I dont know if that’s a good analogy, but we’re getting into spring, and I am thinking about my lawn now 🙂
Another excellent article on the reality of cutting government budgets and their associated spending levels. I have always asked myself a perhaps silly question regarding budgets and spending in any organization and that is why do we always assume the services these budgets are built to provide must be provided on an availability to all basis solely?
Let me use the analogy of a family visit to a local restaurant. Today’s community budgets are totally based on a single menu, fixed portion, meal for everyone (hungary or not) predefined dining activity provided at a preset allocated cost. Does anyone know a restaurant that operated on that basis or could even attract patrons to that dining (e.g. consumption) model? All restaurant service providers operate on a more or less à la carde basis allowing the patron to pay in accordance with what they actually desire, wish to consume and can afford at the time.
The à la carde restaurant does not provide an open menu to all possible meal selection possibilities but rather allows the selection of choices (services) within a well defined menu of preselected alternatives. If you ever have the opportunity to talk with a restaurant owner they will honestly tell you that their menus are NOT imposed by the owner or the in house chiefs but by their customer’s recurring choice selections that create the core of any successful restaurants offerings. the resurants service food offerings are not built and maintained top down BUT rather by consuming customer bottom up.
Why then do we view public services so completely differently? Do all the tax paying citizens in a community want, care for or have the ability to afford each and every service item on the services menu funded by the budget? Does it make any sense to separate the critical infrastructure community services out of the total overall budgeting process and only fund the remaining services options based on an à la cardemodel of actual service community consumption? If few want to consume the Friday night liver dinner special do we all really need to subsidize its provision and wasteful leftovers? In any well run restaurant it would simply be removed as an menu option based on consumption consensus. No bad guys taking something away but the people making a choice not to consume.
I grant there are several questionable issues here in relating this model of consumption to taxpayer services not the least of which are separating out the basic infrastructure services from the à la carde choices and the community political power base and it’s political party system that has build itself on controlling and distributing these services as some form of largesse. But the top down ubiquitous services for all budgeting approach is inherently structured to fail sooner or later based on ever expanding top down service growth and the associated taxation increases to support it. Someone will need to make a choice hopefully before the breaking point is reached.
I believe it is wishful thinking to expect the elected political class to ever do this so we need to start transitioning at least some of our service consumption choices to the bottom up decisions of the tax paying community voters. Every community will likely have a different set of à la carde decisions but the choice and the resultant service allocations will rest in their hands alone. So if you wish to file a lack of service complaint do so with your fellow community voters.
I’ve wondered why don’t people who pay higher taxes get more services? When you get the same degree and amount of service from the government regardless of the amount you pay then, of course, you will want to pay as little as possible. People who pay more should get more. It won’t work for everything, but three basic tiers could exist for 3 types of taxpayers: 1) Doesn’t pay taxes; 2) Pays some taxes; and 3) Pays significant taxes. Coach, business, and 1st class.
If I understand what you are saying its a little like the concept of a value-added tax (VAT) but on the output side of the budget regarding the actual services delivered. Instead of a type of general consumption tax that is collected based on value of a product or service this would be a service level allocation (SLA) output based on your individual tax contribution to the particular service funding model. High individual VAT contribution –> higher SLA. Low individual VAT contribution –> lower SLA.
I still believe you would need to establish a baseline service infrastructure level for all the population regardless and this begins to look awfully familiar to how some European Democratic Socialist states have organized their economies. But perhaps I am just missing how you could ever implement something like such a tiered service delivery system. Obamacare also comes to mind with its tiered Bronze, Silver, Gold, and Platinum service levels.
That is correct. Some things would never change. If you dial 911 you get the same service regardless. But, if you are first class and need a government permit, then you get concierge service and you don’t have to wait in line. Same for the DMV. I’m not going to claim I’ve thought it out from a nuts and bolts perspective, but the idea that regardless of the amount your pay you receive the same government service is, to me, crazy. Someone who pays $1M/year in taxes should get some additional benefits.
The $1.3 trillion “Omnibus” spending bill for fiscal 2018. The Donald said that he signed the bill because the Military needed the money NOW.. That’s true. The main reason that we were stuck with this nonsense is because of Senator Mitch McConnell.
Perhaps one should look at old Mitch a bit more. Or to be more exact, his wife Elaine Chao. And her family.,. The ties between the Chao family and the CCP are rather amazing.. https://uploads.disquscdn.com/images/9e67f9314cb1cd0327ae176a4c6adeb4e59a2bcf5ee8068b84403944c3275cb8.png
I have to laugh at the Chesapeake Bay Regulations.
As a Builder we were hit with this.
We have you install silt fence to adhere to erosion sediment measures. Just yesterday (monday)
the local “dirt cop” came to inspect my job. One of the foreign laborers pouring concrete asked what that was about. I said welcome to America and Virginia were we have an erosion sediment officer but not a *labor erosion officer*. He looked bewildered I explained our Government is ore concerned about dirt reaching the Chesapeake Bay rather than the flow of illegal aliens from Mexico bringing down American wages.
I said;
“You want to be American that will happen soon enough they will take your work permit make you a citizen then the stupid starts to be played on you”
Ken fiscal Conservativism did not die in 2018 , it died much sooner when our Presidents allowed illegal aliens to suppress American wages then forced the American tax payer to subsidize it.
I remember something that happened a few tears ago. A local pharmacist filled a Rx with the wrong strength medicine and the infant died because of a drug overdose. However no action was ever taken against the pharmacist by the State Board. A board member explained to me that the Board can only take action when a complaint is filed with them. Since no complaint was filed, they could not take action.
Perhaps other government units operate under similar restrictions.
Perhaps there are people who would love to help you with the illegal alien problem but they need that complaint first..
I would suggest you start filing complaints with everyone.
That is a similar situation.
The other licensed pharmacist deserve no have the right to a proper adjudication process. The *State* having knowledge of this is by proxy deregulating pharmaceutical regulations.
To the issue in my profession has many political issues involved.
Who and how are businesses and unions going to use this labor. Some of the VISA’S and work permits do not allow the recipient to operate a bussines but work. Install services from lumber companies is the trend for the white collar builder, may be a 500 billion dollar a year industry. Then Virginia’s problem;
Who is a independent contractor (1099)? Ah but Subcontractors must have a license also ( law thing). Now does the subcontractor have a VEC account as to be compliant with the Va. Unemployment Compensation Act ( no matter what your business is from , you pay Va, law thing).
Now who is protecting their migrant labor? Unions and Home Builders Associations.
I think”Joe the Plumber” , should have a level playing field.
Currently he does not in Virginia with the Employee Misclassification/Unlicensed Subcontractors Boondoggle.
One should note that the title of this article is lifted from the title of a PJ O’Rourke book
I gave credit to O’Rourke at the end of my piece 🙂
My apologies. I looked for accreditation and missed it! My bad.
I think the word you are looking for is “attribution.”
Second foot in the mouth :-). Luckily, I only have two. Thanks.
Fiscal conservatism isn’t just dead, it is a rotting stinking corpse. No level of government and no members of government are willing or able to address the problem because we are collectively too damned greedy. We are doomed. Russia can’t defeat us, nor China, nor ISIS, nor any other physical entity. The U.S. of A. will go down by its own hand when the collective credit card maxes out and we just can’t borrow any more. It is my belief that money is the only thing holding our country together right now. Give us a real depression, and the whole thing comes apart.
The crux of the matter is bond markets and government’s issuance of debt by selling bonds. If we want to prevent our future demise, we have to limit the government’s ability to issue bonds. This will never happen. So many people are making enormous sums of money off government spending that nobody will ever attempt to seriously thwart government spending again. Andrew Jackson was the only President to pay off the federal debt and it has been downhill ever since. With a Congress full of spend-a-holics and two Parties that spend with reckless abandon on their respective constituencies (and, with modern Republicans, they even spend money on liberals too apparently), the pads on the fiscal brakes have long worn out as we barrel down the hill.
The real question is how long will we last? In just the past 10 years U.S. debt to GDP went from 67% to 110%. Over 100% was once thought to mean certain doom. In the civilized world, only Japan and Italy surpass us. And our ratio is worse than the European socialists that we love to lampoon. Well, the joke is on us!
P.S. Ken, I’m glad you have some time on your hands. These are good posts. Keep it up!
Thanks for your nice words!. But my time will soon be limited! States and localities issue debt for capital projects, not operating expenses Leesburg, Loudoun, and probably most major cities, counties and towns, have a limit on how much debt they will issue, usually pegged to a percentage of the operating budget. So, in Leesburg, I think it’s 15% each year; the County may require 20%. But I don’t believe the federal government has such a Brick Wall between using debt for capital (i.e. building ships and office buildings) vs. operating. I think we finance everything. I wonder if that could be changed somehow. Again, I think with all this stuff going on, a Convention of the states just may be the solution to all of this – -maybe even the gun and abortion issue, too.
Is there a legal limit for the state or localities? I don’t think there is and Loudoun has been playing shell games for years. So, instead of paying 30% in cash for a capital project, Loudoun pays 0% now. They finance 100% and take the 30% and put it in the operating budget. So, while they are not technically issuing debt for the operating budget, they have in essence done the same thing. Also, Loudoun’s limits were self-imposed. The very first thing the current BoS did when they got into office was raise the county’s debt limit.
What We the People need to do is set a cap on debt for local, state, and federal government. The federal government is even murkier because of the non-governmental Federal Reserve and how they can manipulate the currency. But, if we could make progress with any of the three levels, it would be progress nonetheless.
Glad your time is limited. That must mean good things. Congrats.
If there is a state-mandated debt limit, i am unaware,but you cannot use debt for operating. That i do know. Also, you are limited by the debt rating agencies. If you don’t have at least an A rating for your bonds, youll pay more in interest. You also are limited by what the taxpayers are willing to pay for. Politicians can be voted out if they are putting a local government into hock, like Petersburg. Petersburg was in very bad shape financially due to declining tax ratables and high debt.
I’d like to see more concrete limits. The people who voted Petersburg into a hole are long gone by the time someone has to dig themselves out of a hole. For instance, we should legislate the minimum % of a capital project that must be paid up front. Every time a project is voted on, it should have a significant part paid for (i.e. 30%). This would force those voting for the project, to a degree, to actually have to come up with the funds to fund the project and not pass the buck to future officials and voters and make very real trade-offs between what they fund and what they don’t.
The debt markets have shown that they are more than happy to allow municipalities to sink themselves. They figure if the municipality runs short, the state will help. If the state is in trouble, the federal government will help. You can always raise taxes too.
Let’s face the hard truth that most locally elected politicians don’t have the financial acumen to fully understand the fiscal decisions they are making. They need some solid boundaries to keep them in line. Nothing good comes from a heavily indebted municipality. Usually, a municipality with high debt is not a place people generally want to live. They get preyed upon by much smarter bankers all the time. Bond firms have their own degree of predatory lending.
We should also loosen the bankruptcy rules for municipalities.
When I lived in Ladysmith/Caroline County I was on my POA’s Board of Directors and a previous board member got elected to the BOCS, I worked closely with him and Jeff Sili because Caroline Country was the water slide to financial ruin after years of Democrat spending. For a while there, the county government was literally using a credit card, living month to month meeting gov’t expenses such as payroll, water bill, etc. And a couple of the Democratic BOCS members wanted to float yet another bond to get money to fund the local government. It was reported to me by a Board member that the Commonwealth told the country they would not be authorized to float another note because of the tremendous amount of bond debt the county had accumulated over the years. So somewhere, somehow there is a process where the county has to get some kind of approval. Also, it may have been disproved because the bond revenue would be used for operations. Luckily the Democrat board members were replaced by Republicans a couple years after we moved back into northern Virginia and have Caroline headed to solvency. But things were so bad I was openly advising Jeff Sili and Jeff Black that it was time to start considering a chapter 11 filing for the county. But luckily they turned things around in time.
Thank you for sharing that. While the headlines now have me skeptical of republican fiscal sanity, your example is one that previously caused me much consternation (and still does). That is, liberals spend, spend, spend and conservatives fix the problems. The problem that has created for the republican brand is that democrats are always giving people money and republicans fix the problems, but it makes republicans the bad guys who cut this and cut that. It would be nice if we reign in government spending so that republicans don’t have to constantly be the fiscal disciplinarians (and I too am laughing at myself for writing that in these current times).