By Adam Pagnucco.
For progressives, few issues should be more important than the need for economic growth. Why do we say that? First, let’s see what happens when there is no growth.
We have previously written about what happened to the county budget during the Great Recession but we may not have done it justice. During that time, the evaporation of revenue required the county to implement a series of huge cuts. Consider what happened to this sample of programs during the recession’s three worst budget years.
These programs are the very essence of the best of progressivism: protecting people from discrimination, funding arts and humanities, paying for community grants to non-profits, helping those with special needs and creating affordable housing. All were gutted during the recession.
Believe it or not, the above understates the impact of revenue absence. Consider county employees. Their collective bargaining agreements were broken and they went without raises for three straight years. In FY11, they were furloughed. In FY12, their benefits were cut. MCPS employees were not immune as the county cut its local contribution per pupil for three straight years.
Perhaps cruelest of all was the county’s cut in its local earned income tax credit (EITC). MoCo is one of the few counties in the U.S. that has its own EITC and it was once set to match the state’s credit under county law. During the recession, the county changed its law to allow its EITC to vary and it was cut by almost a third. How bad is it to cut a tax credit for the working poor during a recession? Your author’s former employer, Council Member Hans Riemer, later introduced a bill to restore the EITC to its full amount. After a tremendous fight, he passed it.
We don’t intend to criticize the County Executive or the County Council for making these cuts. The economy went south and they didn’t have any money. That’s the whole point here: without economic growth there is no money.
We are no longer in a recession but revenue growth is not as strong as it once was. Consider the history of county revenue growth, excluding intergovernmental aid, since FY98. Red bars in the chart below refer to years in which tax increases were levied.
From FY98 through FY09, revenue growth excluding intergovernmental aid rose by an annual average of 6.1%. In the years since, it has grown by just 2.7% a year – and that includes the year in which the county implemented a 9% property tax hike. The County Executive’s recommended FY19 budget includes a scant 1.3% growth in revenue excluding intergovernmental aid. How much more spending on progressive programs can be financed with that?
It’s not a coincidence that the slow years for revenue overlap with the years in which county employment has barely grown, higher-paying wage and salary jobs are being replaced by lower-paying self-employment, business formation has flat-lined and taxpayer income outmigration has hit record levels. Stagnant revenues are a result of a stagnant economy.
This dynamic is playing out right now. Some on the County Council would like to expand pre-k education, a huge progressive priority and a great idea. The problem is that it would cost – at minimum – tens of millions of dollars to be meaningful. And when the county is already relying on tens of millions of dollars in employee and retiree health insurance money just to fund its current budget, there is no way that’s going to happen.
Tax revenue is the fuel in the engine of progressivism. That’s because nearly everything that progressives want to do costs money, like funding schools, colleges, youth programs, senior services, social workers, support for vulnerable people, affordable housing and the like. Conservatives don’t have this problem. They think government is incompetent at best or evil at worst, so in their view, money given to government is bound to be wasted. Progressives actually need tax revenue from economic growth MORE than conservatives do because it is essential to the success of their policy agenda.
Here’s the bottom line: you can’t say you’re a progressive and then oppose the growth in tax base needed to pay for a progressive agenda. Any candidate with that position will be unable to implement progressive priorities if elected.
Progressives need economic growth. Because without it, they can’t be very progressive at all.