A primer in surpluses

You need to be careful writing any kind of ode to the way state government once handled budget surpluses.

By “surpluses,” I mean annual tax collections in excess of officially budgeted spending levels that were based on official economic forecasts made by presumed experts who responsibly erred on the short side.

It’s not a uniformly pretty picture—that of the state’s history of surplus practices.

There was that period when legislators started taking the piled-up overages unto themselves in equal shares for non-vetted purposes of their arbitrary distribution back in their districts.

They professed virtue in legislators getting equal shares to lather on their voters in their districts who’d paid in more than the state needed.

Some legislators got so virtuous they went to jail.

It worked sometimes along these lines: You have a little professed college in your district. It’s a church thing claiming accreditation by the Organization for Jesus-Endorsed Post-Secondary Learning, or some such. And from 135 legislators you have a few who are weak. They steer funds to this school’s supposed classroomto-work program and seem by their personal financial situations to have gotten some of what they distributed routed back to their personal pockets.

We don’t permit this legislative practice anymore, which is good. We have processes and procedures for meeting local needs. The Legislature appropriately outlines broad categories of local assistance, and the executive-branch agencies tend to the distribution. That’s how the state Constitution designs it—appropriators appropriate and executives execute.

Through it all, there remains—or ought to remain—one of the first lessons I was taught as a cub state Capitol reporter nearly a half-century ago by seasoned legislative leaders and veteran reporters. One of the most passionate proponents was Mike Beebe, first as a state senator and later as an uncommonly popular eight-year moderate Democratic governor.

I can describe that lesson by quoting my early morning message to Beebe the other day, and his response.

I wrote: “I’m right, aren’t I, that it used to be the gospel that surpluses were one-time money based on onetime circumstances of budgeting and growth and should be used for onetime purposes and not assumed to be recurring for the next budget cycle?” He replied: “Absolutely.”

I could have used a little elaboration, but I suspect he was golf course-bound and averse to doing more than confirming that fact. He probably knew what I was up to and didn’t want to get mixed up in that. And that was to talk down a bit to these kids these days—Gov. Sarah Sanders and her legislative servants.

Beebe became governor in 2007 and inherited two things. One was a surplus of about $1 billion. The other was a state Supreme Court mandate under the Lake View case to improve public-school facilities to a level deemed adequate based on an official list of projects designed by the schools with the regulatory oversight of the state Education Department and accepted by a legislative study group.

It turned out that the surplus and the accumulated school-facilities costs were very nearly the same.

What you do, then, is spend the one-time money on the one-time imperatives under court decree and avoid having to raise any tax or find nonexistent room for these costs in ongoing operations budgets.

What these whipper-snappers today are talking about is taking the freshly assembled $1.16 billion surplus and permanently cutting ongoing income-tax rates and devoting most of the rest to ongoing budget outlays for the public education they claim to be reforming.

But let me repeat: The surplus arose through a one-time circumstance of what was forecast conservatively and what came in excess of that with the post-pandemic economy restarting. There is no assurance we won’t hit a recession and wind up with ongoing budgets based on a one-time circumstance that is not sustaining itself. Then the governor has to start ordering spending levels reduced mid-year, which means people and programs get cut.

It is contradictory for these modern-day Republicans to warn of a forthcoming recession threatened by Joe Biden economics while talking of spending today’s one-time overage for ongoing purposes.

Republicans want to cut income-tax rates because they tend to think lower rates will create more jobs.

The way to do that, though, is the way Beebe brought down the sales tax on groceries, and Asa Hutchinson brought down income-tax rates. That’s incrementally each budget cycle by finding room for incremental cuts within the official forecast of revenue for the next year.

If these legislators simply wanted to do the taxpayers a solid for sending in an unspent billion over the recent budget cycle, they could do tax rebates. Those are one-time payback checks of equal amounts made out to all taxpayers.

I predict Republican legislators will not like the idea. They like permanent across-the-board rate cuts because they send most of the money year upon year to those they call the job creators, meaning those with most of the wealth already.