Between the Lines

Between the Lines by David Lias Remember all that talk earlier this year in Pierre about the state�s budget shortfall? Remember the debate over whether to raise extra revenue by increasing taxes on cigarettes and telephone use, rather than dipping into the state�s reserve funds?

Suddenly, that fiscal crisis that was looming in January seems like small potatoes.

Consider this:

The governor of Missouri has ordered every third light bulb in state buildings unscrewed to save money.

Teachers are doubling as janitors in Oklahoma and working two weeks without pay in Oregon.

Connecticut is laying off prosecutors and Kentucky is releasing prison inmates early. Our neighbor to the south, Nebraska, is hurting, too. That state has dismissed two of its three state diagnostic veterinarians, meaning a rancher with a sick cow in Scottsbluff now has to drive the length of the state to see what�s up with Nellie.

That cutback, the state equivalent of rooting for coins in a car ashtray, is a prime example of how far the pain of anemic state treasuries has spread � and not only in Nebraska, a state where almost 25,000 poor mothers have lost health care and where state college tuition has been raised 20 percent over two years.

Wounded constituents in scores of states have pleaded with state politicians to restore spending. From Lincoln to Honolulu, reports the New York Times, the reply has been the same: the till is empty.

The states are desperate, struggling with their worst financial crises since World War II. They have tapped rainy day funds, raided tobacco money that was supposed to have provided health care for children and taxed every possible vice.

Last year brought the storm warnings: some layoffs, the inconveniences of libraries closing early and roads without fresh asphalt. Now, as states scramble to find ways to cut nearly $100 billion this year and next from budgets that must by law be balanced, the cuts are much larger, and their effects profound.

It is not just that states are withdrawing health care for the poor and mentally ill. They are also dismissing state troopers, closing parks and schools, dropping bus routes, eliminating college scholarships and slashing a host of other services that have long been taken for granted.

�State governments are under siege,� said Angela Monson, president of the National Conference of State Legislatures. �This is the real deal, and it�s only going to get worse.�

In Ms. Monson�s home state, Oklahoma, teachers have driven buses, mopped the floors and even cooked cafeteria food, as support staffs for major school districts have been sharply reduced or eliminated.

A new library stands empty in Hawaii; the state built it but left no money for books.

In Nebraska, a museum of dinosaur bones and natural wonders dismissed its only full-time staff member. In a state that has vowed to try to hold onto its young people, a thousand University of Nebraska students have been told their financial aid is over, and 431 college positions were eliminated.

Raymond Ring, an economics professor at The University of South Dakota, said in a recent news story that South Dakota has a strong tradition of operating a fiscally-conservative state government.

That may explain why we don�t seem to be suffering quite as much as other states.

�The low tax rates in South Dakota exist because our leaders in Pierre prefer lower taxes,� Ring said. �It�s a conservative, low-tax mindset � with limited support for expanded government activity.�

South Dakota�s state and local tax burden has stayed in the 8 to 9 percent range for the last 30 years, and was at 8.5 percent in 2003.

According to Gary Viken, state secretary of revenue and regulation, the state�s low tax rate helps attract new businesses to South Dakota.

�We�ve got a lot of good things going for us � a good work force and an attractive tax structure,� Viken said.

State Sen. Ed Olson, R-Mitchell, said South Dakota�s conservative spending philosophy helped lawmakers weather this year�s budget deficit.

Due to a poor national economy, many states had to either cut programs or raise taxes to balance their 2003 budgets. Minnesota had to deal with a $356 million shortfall, and California was faced with a $25 billion deficit.

Sen. Olson said the state had a smaller budget deficit of $25 million because South Dakota has a smaller total budget, and state tax revenue didn�t drop dramatically.

�I think the volatility in tax revenue that other states have experienced is due to the volatility in collecting personal income tax and corporate income tax when the economy goes bad,� Olson said.

State Rep. Mel Olson, D-Mitchell, said South Dakota�s tax revenue also depends heavily on business, since the state depends on sales tax. Rep. Olson disagreed with the idea that all taxes are a burden.

�Before suggesting that we should be free from all taxes, people should try first to haul away their own garbage or plow the snow off the streets themselves,� Rep. Olson said. �The people do get their money�s worth in South Dakota.�

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