American Forum Op-Ed

A couple of weeks ago, as families and businesses were trying to recover from the destruction from the floods across the state, thousands of us pulled together. We sandbagged, rescued, washed, dried, moved, fed, housed, clothed and hugged each other until we were all safely through the storms. That is who we are. Kentucky is a beautiful place to call home because we take care of our friends and neighbors, knowing that we’re all in this together.

When our legislators meet in Frankfort this week, their job is to develop a decent budget, one that allows our communities to get important work done that we can’t accomplish as individuals. We created public school systems to provide opportunity, public health systems to keep ourselves well, and environmental and public safety systems to protect our air, water, and people. For these to function -- and to support our quality of life and our economy -- these systems need adequate, stable investments of our public dollars.

The Kentucky Forward Coalition -- a coalition of education and health advocates and faith, labor, and community groups -- is working for tax reforms that would generate the money for investments that reflect Kentucky’s values, improving our quality of life. Many of us see first-hand how the chronic underfunding of our schools and community health services is damaging our Commonwealth. We teach the students who slip behind because of cuts to after-school programs and swollen class sizes; we console the families of people on waiting lists for treatment for mental illness; we work to keep children safe while coping with a severe shortage of resources; and we are the people who wonder why Kentucky couldn’t be among the top in quality of life indicators, instead of always stuck at the bottom. Kentucky deserves better.

The legislators need to stop scrambling for quick fixes every year. Until we fix our broken tax structure, we’re going to continue to lag behind the rest of the nation. And to be effective, solutions must include significant steps toward making our tax structure more balanced.

Right now, well over half of Kentuckians – 60 percent – earn up to $47,000. Those of us in this pool pay on average about 11 percent of our income to state and local taxes. Meanwhile, the wealthiest 1 percent contributes only about 6 percent. We need revenue solutions that bring balance, as well as needed funds.

Kentuckians should also beware of so-called solutions that, if adopted, could worsen the inequity in our current tax structure. Some in Kentucky have proposed raising Kentucky’s sales tax as a way to earn revenue. Our coalition believes that a sales tax rate increase isn’t a good option because it takes a much bigger bite out of the incomes of lower and middle income families. Data by the Institute of Taxation and Economic Policy shows the percentage of our incomes that Kentuckians currently pay in sales taxes. People who earn up to $47,000 pay between 4 and 5 percent of their income to sales taxes, while the wealthiest 1 percent pay less than 1 percent. It’s not a solution that is fair or sustainable.

Instead, we can pass fair revenue reforms that we can depend on year after year. One proposal that meets these criteria calls for comprehensive tax reform that would tax luxury services, income above $75,000, and non-farm estates. This proposal would also direct $100 million in tax reductions to more than 300,000 Kentucky families with incomes less than $42,000. All together, this plan would generate about $300 million in revenue a year -- a significant step toward addressing our chronic budget gaps. This plan, sponsored by Rep. Wayne, sets the benchmark for needed reforms, and we’d gladly support other good ideas, as well.

Kentuckians have long understood that united, we stand. Now is the time to put aside ideologies that only tear down, and stand together for solutions that help us work together to make sure that Kentucky is a place where our kids can drink clean water and work in good jobs. It’s time to come together to move Kentucky forward.

ILLINOIS EDITORIAL FORUM

By Woods Bowman

The Illinois state budget is like the Nightmare on Elm Street movies – progressively more horrific sequels that seemingly never end. Maybe this time it will have a happy ending, but I doubt it.

The 2010 crisis is the result of a chronic budget imbalance. Spending has been growing faster than revenue, so slash-and-burn spending cuts that don't lower growth in spending and tax increases that don't increase growth of tax receipts will provide but temporary relief.

There are three things citizens should know about the state budget.

First, when commentators speak of the deficit as $13 billion or so, they are mixing two numbers that require different solutions. In doing so, they grossly understate the size of the problem.

Second, while the state provides very little service directly, it underwrites the way local school boards, medical providers and pension systems provide services. Given the integral role of the state, it would be unwise to solve the problem with spending cuts exclusively.

Third, although a tax increase (probably income) is a necessary part of any budget solution, without tax and spending reforms even that won't prevent another budget crisis within a few years.

Here’s the real nub of the state budget problem:

The deficit consists of two parts: a one-time piece, like old unpaid bills, and a recurring piece that will cause new bills to go unpaid. These two are nearly equal parts of the $13 billion figure.

The unpaid-bill figure does not include the state's $73 million underfunded pension system – the largest in the nation. This is money the state owes its employees and former employees for services already provided and for that reason cannot take the obligation out of the debt.

Once old bills are paid, they are paid for good and off the books. Any spending cuts or new taxes for this purpose could and should be temporary. But the recurring piece is a different matter. It can be eliminated only by permanent spending cuts and tax increases.

Nearly a quarter of the state budget goes to Medicaid. The good news is that the federal government reimburses nearly half of this amount. That is also the bad news, because $2 of cuts are necessary to achieve $1 in savings and federal law imposes lower limits on types of services and scope of coverage a state must provide to receive any federal reimbursement. Simply put, that means sick people receive fewer services and they remain sick and get sicker instead of better.

Another quarter of state spending goes to school districts and local governments. It only pushes the problem onto the property tax -- the dominant tax source at local levels. Cutting appropriations to state universities and scholarship aid, which are 4 percent of the budget, would force increases in tuition and parental contributions.

Ten percent of state spending goes for debt service and pensions that, as legal obligations, cannot be cut -- period. Finally, nearly 8 percent of spending is for transportation, which is financed by taxes on gasoline license fees and the like.

These objects of spending account for over two out of every three dollars flowing through the budget. Thus a 10 percent budget cut translates into a 30 percent cut, more-or-less, in the remainder of the budget. This is why it would be unwise to try to cut our way out of the problem.

It is necessary to reduce the rate of increase in spending and increase the rate of increase in revenues. This is why various proposals for limiting the growth in pension funding requirements are on the front pages now.

This is also why it’s important to find ways to make Illinois’ tax system more progressive.
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Bowman is Professor of Public Service Management at DePaul University in Chicago. He was a former legislator and past chair of an Illinois House Appropriations Committee.
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Copyright (C) 2010 by the Illinois Editorial Forum. 4/10

MASSACHUSETTS FORUM

By Tom Benner

Democracy works best when people participate in their government; and people participate best when they can get the information they need to weigh in with opinions and evaluate the decisions made by those elected to represent us.

It’s that time of year now when Massachusetts is working on a new state budget. No piece of state legislation has a bigger impact on our everyday life -- from schools and roads, to public health, police and fire protection, and parks and recreation. The budget is how we as a Commonwealth express not just what we want to accomplish through government, but also how to pay for it.

State budget documents are not known for being “easy reads.” But understanding the Massachusetts state budget has just gotten easier, with a new online, interactive tool you can use to explore the state budget and see how and where money is allocated. The Budget Browser, found at http://browser.massbudget.org/, is part of our work at the Massachusetts Budget and Policy Center to help citizens of the Commonwealth better determine whether the state budget meets public needs and priorities.

The Budget Browser is a valuable resource. You can look up how much was spent over the past decade in categories large and small – from the Massachusetts public school system and all of the state’s colleges, to your local community college. You can see budget amounts for a given year or – to make meaningful comparisons – spending over several years, adjusted for inflation. Plus, you can create and download charts to print out and use for reports, media stories, or other documents.

The Browser tracks line items that have moved from one department to another through various government reorganizations and consolidations, with notes alongside the data alerting the user to these accounting issues.

Other features include a Tax Revenue page that tells how Massachusetts taxes have changed over time and
how they compare to other states. There’s a Resources and Glossary page that includes definitions of budget terms, a step-by-step description of how the state budget process works, and links to additional budget resources.

For too long, information needed to make informed choices about how state dollars are allocated was out of the reach of ordinary people. It used to be that in order to get spending levels for spending items such as health care or environmental programs over the years, for example, you'd have to thumb through a stack of thick documents, each containing hundreds of line items. Now, anyone with access to the Internet can find what they need with a few clicks of a computer mouse.

As citizens, we have an interest in what programs and services we want to preserve and what kind of communities we want to live in. With a crushing national recession increasing public needs, at the same time it reduces state resources to meet those needs, it is now more important than ever to understand how budget decisions being made by our elected leaders will affect services and our quality-of-life across the state.

Early feedback on the Budget Browser has been positive. Users across the state have called it a great new tool that helps the public to understand how state resources are being used and promotes informed and active citizenship. That’s certainly the idea.

It’s your state budget too. So get all the information about it at http://browser.massbudget.org/. An open budget allows us all to understand the state we’re in.
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Benner is communications director of the Massachusetts Budget and Policy Center.
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Copyright (C) 2010 by the Massachusetts Forum. 4/10

MISSISSIPPI FORUM

By Ed Sivak

The governor’s office projects that state revenue estimates will fall $1.2 billion short of what the state needs this year. This means that Mississippi will have significantly less money than in past years to educate children, train the workforce and maintain the roads and infrastructure that foster economic development.

The magnitude of the crisis requires a balanced approach that includes raising revenue to keep the state from moving backwards. Three revenue raising recommendations offer a starting point for helping to solve this problem. The recommendations would produce much needed funds while allowing Mississippi’s tax structure to keep pace with advancements in the global economy.

First, modernize Mississippi’s sales tax to reflect today’s purchasing habits. The sales tax was designed during the Great Depression to provide the state with revenue based on what people bought. Back then, people spent most of their money on things, rather than services. In recent decades, however, the share of spending that households devote to goods has declined. And what households spend on services -- many of which didn’t even exist during the Depression -- has increased. The shift not only costs the state money, it also sets up some imbalances that work against middle-income people. For example, if one buys a lawnmower in Mississippi to cut his or her grass, they pay sales tax on the purchase. If one pays a lawn service, he or she does not pay the tax.

Recognizing this, the Mississippi Tax Study Commission, appointed by Governor Barbour in 2008, recommended adding additional services to the list of what is taxable. The recommendation included 21 items ranging from tanning services to pet grooming. Taxing the 21 items would generate $80 million annually.

Second, update the personal income tax. Mississippi’s tax brackets are the same as they were 25 years ago back when a family could live on $30,000 a year. Today, a family of four with two children that makes $30,000 a year is in the same tax bracket as a similar family earning $1 million a year.

Recent income trends call into question the current tax brackets. According to the Center on Budget and Policy Priorities, over the last two decades, Mississippians with incomes above $117,000 have experienced over twice the rate of income growth as middle income families earning $40,000. A well-structured income tax system would take into account the trends. By adding a new state income tax bracket of 6 percent on taxable income of over $45,000 (roughly that of a household with a little over $64,000 a year in total income for a family of four), Mississippi would generate approximately $64 million.

Third, update Mississippi’s Corporate Income Tax. Given the link between the personal income tax and the corporate income tax, Mississippi’s corporate income tax could also be updated. Estimates from the Institution of Taxation and Economic Policy show that a new 6 percent bracket on corporate taxable income over $45,000 could raise approximately $55 million annually in Mississippi.

It’s important to note that these revenue recommendations only cover part of the anticipated gap in forthcoming years. There will also be budget cuts. That’s the point of a balanced approach it recognizes that no one strategy is enough to solve a problem this big and that relying too heavily on spending cuts hurts the economy, hurts working families and limits the state’s ability to move forward when prosperity returns.
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Sivak is the director of Mississippi Economic Policy Center.
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Copyright (C) 2010 by the Mississippi Forum 4/10

By Martha Richards

When facing tough times, most Americans turn to the arts. We crank up our favorite songs on the radio, go to a movie, or settle in for an evening of “Dancing with the Stars.” And yet as our country struggles through one of its worst economic periods, our leaders seem oblivious to the pivotal role the arts can play in our recovery.

Seventy-five years ago our leaders made better use of our cultural strengths. When President Roosevelt led the country during the Great Depression of the 1930s, he understood that the arts generated hope and community pride, and he invested in them as part of his recovery strategy.

The centerpiece of his recovery program was the massive Works Progress Administration (WPA), and it supported arts, drama, media, oral history and literacy programs side by side with programs to construct public buildings and roads. The WPA employed more than 40,000 artists, including many of the best artists of the period, such as Eudora Welty, Zora Neale Hurston, Louise Nevelson, Langston Hughes, Orson Welles and Arthur Miller. These artists eventually became American cultural icons, but during the Depression, they were out of work along with everyone else.

During his election campaign, President Obama recognized that the country was facing a crisis of imagination. He campaigned on a platform of hope and convened a National Arts Policy Committee of 33 arts leaders. He promised to be a champion of the arts and said, “To remain competitive in the global economy, America needs to reinvigorate the kind of creativity and innovation that has made this country great.”

But in his recent State of the Union speech about the economic stimulus programs, the president did not include the arts. He announced that 2 million Americans had been hired because of his programs, and he spoke proudly of hiring construction and clean-energy workers, teachers, police officers, firefighters, first responders and correctional officers. He did not mention hiring artists.

To be fair, his administration hasn't completely ignored the arts in its recovery plans. The National Endowment for the Arts received $50 million of stimulus funds last year despite strong Republican opposition – but that is a miniscule percentage of the total Recovery Act package of $787 billion.

The total budget appropriation for the NEA this year is only $167.5 million – enough for about 7,600 jobs at a salary of $22,000 per year – the poverty level for a family of four. Does anyone seriously believe that such a meager investment is adequate to maintain the cultural vitality of a nation of 315 million people in a period of crisis?

It’s time for President Obama to include artists in his recovery plans. His strategy of offering tax breaks to small, private businesses won’t create the jobs artists need. We need federal employment programs like the WPA of the 1930s or the Comprehensive Employment and Training Act of the 1970s that create true public sector jobs.

Thousands of unemployed and under-employed artists are taking whatever jobs they can find these days. Instead of ignoring their talents, we should be hiring them to beautify our cities, spark the creativity of our children, ease the loneliness of our seniors, document our past, imagine our future and inspire us all with performances, workshops, books, exhibits and a wide range of other activities.

The next Zora Neale Hurston and Arthur Miller are standing in unemployment lines somewhere right now. Their creativity is among our country’s greatest assets. Let’s not waste it.
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Richards is founder and executive director of WomenArts; she is also co-creator of Support Women Artists Now Day.
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Copyright (C) 2010 by the American Forum. 3/10

AMERICAN FORUM

By Cindia Cameron

In March we look forward – eagerly anticipating the arrival of spring; and we look to the past – celebrating National Women’s History Month. Looking back, we might ask what our pioneer activists in women’s rights would say about tough choices working women still make to keep their families afloat. Looking forward, we can celebrate Women’s History Month by taking action to pass the Healthy Families Act.

One inspiration for action is the story of a young mother named Tahirah who lives in Denver, CO. At 26, Tahirah found a dream job: crew leader in an airport restaurant. The wages were low and the hours long. Still, the job offered a chance to supervise and a clear path to the management track. But there were two wrinkles: her preschool-age daughter has asthma and this job did not provide any paid sick days.

Tahirah managed to keep her job and home from falling apart – for a while. But there were times when her daughter was sick and her manager would not allow her to leave work. There were also times when Tahirah left her daughter home sick because she simply couldn’t risk being fired. One day her daughter was rushed to the hospital. A friend called to tell Tahirah to meet them there. But her manager didn’t give her the message for hours. Eventually she was forced to leave that job. She’s found others, but still none that offer the paid sick days she needs.

Everyone gets sick. Everyone deserves time to get better. The United States is the only developed nation in the world where no law provides this basic labor standard. Nearly 40 percent of private sector workers
in this country have no paid sick days. According to the Institute for Women’s Policy Research, this number includes 78 percent of hotel workers and 85 percent of food service workers. It’s clear who suffers: struggling families, low-income working women, their children. However everyone in the community is affected.

As consumers we eat in restaurants where most servers face a choice between coming to work sick or losing income and possibly a job. As family members, many of us have parents or grandparents living in nursing homes where staff members face this same impossible choice.

Providing access to paid sick days will help struggling state budgets. Researchers in New Hampshire for example, found that workers with paid sick days are 14 percent more likely to visit a medical practitioner, which could translate into fewer severe illnesses and hospitalizations. They conclude that guaranteed paid sick days would lower medical costs by reducing emergency room and hospital use.

The solution for families, workplaces and public health is for Congress to pass the Healthy Families Act. This legislation would allow full-time workers to earn seven paid sick days each year to care for themselves or a family member. It would offer low-wage women in particular, the means to safeguard both their health and their jobs in these difficult economic times.

A national labor standard of paid sick days is a fitting way to honor women -- past, present and future -- by honoring their dual responsibilities: work and family.
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Cindia Cameron serves as organizing director for 9to5, National Association of Working Women, and chair of the Georgia Job/Family Collaborative.
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Copyright (C) 2010 by the American Forum. 3/10

TEXAS LONE STAR FORUM

Karen Hadden

Heavily subsidized by taxpayers and rate-payers, nuclear power is susceptible to delay, cost overruns and significant environmental risks. Investing billions into more nuclear power threatens to derail funding that would be better spent on energy efficiency and safer, cleaner renewable energy.

Moody’s advises investors that nuclear projects frequently lead to financial crunch and credit rating drops. The two South Texas Project reactors proposed for the existing Bay City site were supposed to lead the so-called “nuclear renaissance,” but there has been strong citizen and legal opposition and the cost has already skyrocketed. Estimates now exceed $18 billion, three times original projections. No shovel has yet been turned and no license granted.

Maybe you remember the massive boondoggle when the South Texas nuclear reactors ran six times over budget; were eight years late coming online; and plagued with mismanagement, construction problems and lawsuits. Think déjà vu.

South Texas Project partners NRG and San Antonio municipal utility CPS Energy have not seen eye to eye. For more than a year a buyer was sought for a portion of the increasingly expensive reactor project, but none surfaced.

When CPS hid a $4 billion cost increase from the public for half a year, the backlash led them to court to clarify terms for pulling out of the project. A settlement agreement now halts further CPS nuclear investment and shrinks their original 50-50 reactor share by 85 percent. The lesson: Nuclear reactors are simply too risky and too costly.

The good news is that effective and affordable energy solutions are already in place, growing and improving. Wind is a huge success story for Texas. We now lead the nation in wind power. Last October, a record was hit when wind accounted for 25 percent of the state's electric generation.

Texas is perfectly positioned to demonstrate similar leadership on the solar front. Solar technology is advancing and costs are plummeting. Stimulus funding will help. We have a huge opportunity to develop new clean energy industries and create local jobs -- if we do things right.

For example, West Texas wind that comes in at night can be perfectly paired with solar energy generated during the day. Natural gas and energy storage can bridge the gaps between them. Pre-approved transmission is helping new wind and solar projects move forward. Geothermal power systems can help heat and cool homes. And "smart grid" technology will lessen the need for clunky baseload plants -- the outdated cement trucks of the energy world. It’s time for zippy and flexible energy vehicles that can ramp up or down quickly to meet changing demand.

Energy efficiency is reducing electric demand. New homes and businesses are being built to use less energy and save on electric bills. New legislation has allowed for better financing of energy upgrades. Those who wisely make improvements will be free of ongoing debt should they decide to sell their home.

In the end, who will want expensive nuclear power when more affordable options are available? Industrial customers want short-term, flexible energy contracts, not long-term burdens.

Texas ratepayers are at huge financial risk if NRG continues down the nuclear path. Luminant also seeks to build two more reactors. Their reactor design for Comanche Peak, has never been built anywhere in the world. It’s time to drop expensive and risky nuclear power. We should pursue affordable energy efficiency first and then tap the free power of Texas’ sun and wind.
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Karen Hadden is the executive director of the Texas based Sustainable Energy & Economic Development (SEED) Coalition.
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Copyright (C) 2010 by the Texas Lone Star Forum. 2/10

By K.A. Owens

Leading congressional health insurance reform proposals include expanding Medicaid, which could not only bring coverage to nearly one million low-income, uninsured Georgians, but would provide at least 90 percent of the funding to do so.

Despite the obvious and significant benefits to the state’s economy and its citizens, Gov. Perdue, Lt. Gov. Cagle, and others opposed to reform are arguing that Georgia cannot afford its share of the proposed Medicaid expansion in either the House or Senate proposal.

They claim that expanding Medicaid will cost Georgia more than $2 billion over six or seven years, but they rarely mention the billions in new federal funds that would flow to Georgia’s economy during this time.

But their calculations are misleading. The cost on a yearly basis of expanding Medicaid for hundreds of thousands of uninsured citizens with little access to coverage is not only affordable, but is a bargain for Georgia.

The Georgia government’s own estimate of the House proposal forecasts $93 million in additional state costs the first year (2013). This equates to an increase of less than 5 percent of Georgia’s existing Medicaid budget and less than 1 percent of the overall state budget.

In addition, these state costs would be accompanied by hundreds of millions in new federal funds flowing into Georgia each and every year, contributing to the state’s healthcare sector and local economies.

Over time, these costs would increase as the state’s economy and population grows. As more people enroll, and as medical costs increase with inflation, the Georgia government estimates that costs could reach $500 million a year by 2019. However, this number must be put into perspective as well. Relative to the overall state budget a decade from now, these costs will remain a small percentage and surely will be manageable.

Although Georgians across the income spectrum have seen their access to employer-sponsored coverage decline in recent years, low-income families have been most affected.

A mere one-quarter of Georgians in families with incomes below twice the poverty level ($36,600 for a family of three) have employer coverage, compared to 76.6 percent for families with income above this threshold.

As a result, low-income individuals and families in Georgia are far more likely to be uninsured (35.9 percent) than their higher income counterparts (10.9 percent). In total, nearly 1.7 million non-elderly Georgians (nearly one in five) lacked health insurance in 2007-2008.

Those opposed to expanding health insurance coverage should also consider the likely effects on Georgia’s uninsured children and adults if they remain uninsured. Uninsured people have less access to timely medical care, worse health outcomes, and are more likely to die prematurely than their insured counterparts.

There is plenty of time for Georgia’s leaders to ensure the state has adequate funds to pay what the federal government does not so that we reduce our high number of uninsured citizens. Both proposals give states several years to comply with the new Medicaid eligibility standards, and both provide full federal funding for the first two to three years of implementation.

Our elected leaders should be tackling Georgians’ growing needs, not posturing against national reform. Georgia's uninsured rate is tenth in the nation, approximately one in seven people lived in poverty in 2008, and our job loss rate is fifth in the nation. Vulnerable groups are hit hardest during recessions, and low-income workers are losing employer-sponsored health insurance faster than others.

Rather than using misleading multi-year figures to argue that the state cannot afford to expand Medicaid coverage to its struggling citizens, Georgia’s leaders should realize that we cannot afford to lose out on this incredible opportunity to insure its neediest citizens and bring hundreds of millions of dollars into the state’s economy annually.
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Sweeney is the senior healthcare analyst for the nonpartisan, independent think tank, the Georgia Budget & Policy Institute.
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Copyright (C) 2009 by Georgia Forum. 12/09

This was certainly not the way Gov. Haley Barbour wanted to end his term in state office. Tax revenues are down $371 million and counting. State budget alternatives are grim, with cuts of at least 12 percent for most agencies, including education.

Seeking opportunity amid crisis, Barbour is recommending major government realignment and simplification, as well as consolidation in K-12 and at the university level. By including such incendiary proposals as combining Alcorn State and Mississippi Valley with Jackson State University, Barbour took the chance that his proposals will be dead on arrival at the Capitol in January. His challenge to support his proposals or “come up with a better way” ought to be taken seriously.

Cuts and consolidation should not be the only options on the table. The kind of cuts the governor is proposing will be a severe shock to the economy, just when Mississippi and the nation are trying to climb out of the Great Recession. This decade’s declining growth in Mississippi’s major revenue sources – personal and corporate income and sales taxes – should have lawmakers looking at the state’s tax structure.

There at least five ways Mississippi could adjust its tax structure to help make it through the current economic troubles and to build a better revenue picture for the future.

1. Mississippi could join the 20-plus other states in the Multistate Tax Commission to prevent large corporations from playing shell games to avoid paying state taxes.

The U.S. Government Accountability Office reported last July that 30 percent of corporations with earnings of $50 million or more paid no federal income taxes between 1998 and 2005. In 2003, the Multi-state Tax Commission found that large corporations avoided $7 billion in state corporate income taxes by, among other tactics, shifting reports of profits from state to state. Corporate income tax revenue accounts for only about 5 percent of overall revenues in Mississippi.

The solution is to join the Multistate Tax Compact and require every multistate corporation to follow uniformity guidelines when reporting income and profits. This will give the state a way to validate corporate returns. It works for other states and it could work here, too.

2. Mississippi could increase the top personal income tax for the wealthiest among us. Personal income taxes make up about 25 percent of state and local tax revenue. The wealthiest 20 percent of all Mississippians take home almost half of all income earned. The real income of top earners has increased 23 percent from 1999-2005, while the bottom 60 percent of Mississippians saw a drop in real income when adjusted for inflation – even while worker productivity increased. Creating a new state income tax bracket of 6 percent for taxable income over $125,000 certainly would be a better alternative than closing 10 mental health crisis centers and hospitals.

3. The National Association of State Budget Officers suggests that each state monitor tax breaks it gives corporations. If the return from these tax breaks falls short of promised benefits to the state economy, a state could choose to impose a surcharge. Hiring more tax auditors also could net millions of dollars.

4. The Mississippi House has tried for a number of years to increase fees and fines to generate revenue, and to ensure that fees for state services actually reflect the cost of those services. Penalties and fines for violations of labor safety and environmental regulations, for example, should be costly enough to deter such practices, to clean up problems, and to adequately support state agency efforts to oversee and enforce regulations protecting the public. DUI fines also could be increased for each succeeding arrest, as is done in Louisiana.

5. Many health advocates support following the lead of Arkansas and other states in taxing sugary soft drinks and nutrition-poor, salty and sugary snacks. Mississippi still has the nation’s highest obesity rate. Making foods that contribute to obesity more expensive will help families choose healthier foods, and help persuade food manufacturers to change ingredients in those unhealthy snacks.

By not including any proposals to increase state revenues, Gov. Barbour is sticking to the GOP playbook of “Government is the problem --Don’t raise my taxes.” But this budget crisis is severe enough that, combined with the devastating farm losses throughout the state, it could send Mississippi’s economy back into recession. Our government should be better than that. It is time to look at the big picture and re-imagine what we expect from state government. There is another way, if only there are enough real leaders to champion it.
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Evans is a Jackson health care activist and writer.
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Copyright (C) 2009 by the Mississippi Forum 12/09

MASSACHUSETTS FORUM
By Peter Enrich

Our local and state governments provide many of the vital public structures that build strong communities and ensure opportunity for us and our children such as schools, transportation, public safety, parks, and health and social services.

Yet, the tax structures that enable us to pay the price for a civilized society suffer from two severe flaws. First, state and local taxes are exceedingly volatile, dropping calamitously during economic downturns, when the revenues are most badly needed. State and local governments, unlike the federal government, can only spend what they take in.

Second, unlike the federal income tax, state and local taxes are regressive: households with lower incomes pay a higher share of their incomes for the support of state and local government than do their wealthier neighbors. This regressivity is largely due to heavy reliance on sales taxes; even with exemptions for groceries and other necessities, lower income households spend far more of their incomes on taxable items than do higher income families. A recent study showed that low-income Massachusetts households spent 5.4 percent of their incomes on sales taxes, compared to 1.2 percent for wealthy households.

While we depend on and demand the services of state and local governments, we resist the reforms that would provide a healthy tax system. So, we find the state cutting essential services and turning to gambling, sin taxes, and gimmicks to try to pay its bills.

Instead, there are three directions in which Massachusetts should look to improve our ability to pay fairly and adequately for the service we all need:

• Follow the federal example and rely more heavily on income taxes, especially income taxes designed to require those with greater means to contribute a greater share to the common good. Even here in Massachusetts, where the constitution forbids graduated rates, personal exemptions and differential rates on investment income can build substantial progressivity into an income tax system. And small rate increases can yield impressive new revenues.

• Broaden the scope of our sales taxes to reach, not only sales of goods, but also a wider range of sales of services, such as club memberships, entertainment, personal and property care, and professional services. Many states presently tax some services, but often only a handful. Massachusetts only taxes 18 of the 168 services identified by the Federation of Tax Administrators and is the only state taxing none of 40 household service categories identified by the Center on Budget and Policy Priorities. Extending the tax to more services reduces an irrational inconsistency in the current sales tax, dramatically increases the tax’s revenue yield at a time when a growing share of household spending is on services, and diminishes both the regressivity and the volatility of the sales tax.

• Increase the share of taxes that are collected from businesses, rather than families. By one measure, businesses paid half of all state and local taxes in the 1950s, but only a quarter by the 1990s, and probably substantially less than that at present. By ending some of the tax incentives that have been shown to be ineffective in guiding business location decisions, closing the loopholes that have encouraged increasingly sophisticated corporate tax “management,” and reversing some of the rate cuts granted to businesses during better times, the state could go a long way to providing needed revenues while restoring the historical balance between taxes on individuals and businesses.

Each of these steps will demand courage on the part of political leaders and education of citizens about the workings of the tax system. Most importantly, they will require a revived recognition by all of us that taxes are an investment in, not an obstacle to, our shared future prosperity.
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Enrich is a professor at Northeastern University School of Law, specializing in issues of state and local governance and finance, and a former general counsel to the state’s Executive Office for Administration and Finance under both Gov. Dukakis and Gov. Weld.
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Copyright (C) 2009 by the Massachusetts Forum. 11/09

OHIO FORUM
By State Representatives Mike Foley and Bob Hagan

Ohio is a great, messy, complicated state. We are conservative and liberal, libertarian and socialist. We likewise have a whole bunch of moderates except for the host of issues on which they swing to the left or right. In the partisan parlance of the day, Ohio is a purple state. In a word, we are normal.

We have some real structural economic problems now, however. Problems we can only solve if we rebalance our politics and take some progressive economic actions.

First and foremost, we must deal with our budget or lack thereof. Since 2005, when Ohio enacted a dramatic tax cut, our economy has been headed for the train wreck where it ended up this year.

While Gov. Strickland should be commended for seeking a moderate solution, his hands are somewhat tied by the legislature in which we serve. Ohio needs a bold, progressive solution. In the past few years, all Ohioans have seen a dramatic reduction in the taxes people and corporations pay. This may seem popular, but these tax cuts have not only wrought enormous, unnecessary challenges; they have failed to produce any of the economic results which led to their original implementation.

The argument for these dramatic tax cuts was that it would stimulate Ohio’s economy; it did not. Rather, Ohio’s economy sank further, well before the current national economic troubles. In fact, were it not for the national crisis, Ohio would be in much bigger trouble than it currently is, thanks to federal “stimulus” funds.

We cannot make up for the harm of the 2005 tax cut policy, but we can stop it from causing further damage. We can bring Ohio back from the edge of greater decline. Rather than following the governor’s modest proposal, we should repeal much of the 2005 income tax cut and restore Ohio’s upper tax levels to those of 2005. The benefits from pursuing this policy are many. Don’t forget, the compromise budget adopted last summer left not only many people unhappy, it left far too many of our fellow citizens hurting even more.

The pain of the cuts enacted just 10 weeks ago is already being felt throughout our state. Among the Ohioans who lost out are our youngest and oldest neighbors and those most in need of help. From the Early Learning Initiative to adult protective services, programs and services geared to enable children to start school well-prepared and to ensure that the oldest among us are not abused have been eliminated and decimated by budget cuts.

Community mental health services were cut by nearly $200 million compared to spending last year. These cuts have occurred at a time of unprecedented need.

We cannot wait any longer for a bold solution. That solution is pretty obvious, it involves simply restoring tax rates for those earning more than $200,000 annually to the level prior to the 2005 cuts and creating a new tax bracket for those earning more than $500,000. Both rates are lower than the top tax rate for several years during the 1980s.

Certainly, those among us earning such high salaries at this time of crisis are willing to contribute just a little bit more, so that all of us can have a better future. One thing we know about Ohioans is that despite our flaws, we care about our state and each other.

Given our crisis, those who make more have more to contribute. They have done well by Ohio. It is not such a bad thing to require those who are doing pretty well right now, to help those who are struggling, by contributing more in taxes to the state.

We need adequate social services; we need good schools; commonsense development patterns; recreation centers and parks; clean drinking water and air; bridge inspectors; meat inspectors; colleges and universities; great transportation networks. The list goes on. But none of this happens without sharing the costs, burdens and opportunities.

We love Ohio. It has contradictions galore and a sense of absurdity that we adore. But we hate that amidst all of our history of innovation and hard work, the portion of us that is selfish has been encouraged and indulged by our state government for the last two decades.

We can extricate some of that selfishness from our tax code. It is past time. Having top income earners paying their fair share would provide Ohio’s bone-dry budget with an additional $1.4 billion just in this budget period. It’s the right thing to do.
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Foley is a state representative (D-District 14). Hagan is a state representative (D-District 60).
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Copyright (C) 2009 by the Ohio Forum. 10/09