{"id":11138,"date":"2018-06-18T07:00:13","date_gmt":"2018-06-18T11:00:13","guid":{"rendered":"https:\/\/www.theseventhstate.com\/?p=11138"},"modified":"2018-06-17T16:56:04","modified_gmt":"2018-06-17T20:56:04","slug":"how-to-spend-more-on-education-and-transportation-without-raising-taxes","status":"publish","type":"post","link":"https:\/\/www.theseventhstate.com\/?p=11138","title":{"rendered":"How to Spend More on Education and Transportation Without Raising Taxes"},"content":{"rendered":"

By Adam Pagnucco.\u00a0\u00a0<\/em><\/p>\n

It\u2019s election season and that means it\u2019s time for lots of promises from politicians.\u00a0 And boy are they promising a lot, especially on the county\u2019s two big issues of education and transportation.\u00a0 The mailbox\u2019s \u201cprogressive leaders\u201d have \u201cplans\u201d to guarantee every child a great school, invest in transportation \u2013 especially transit \u2013 and to do all of the above without raising taxes.\u00a0 Sounds great, yeah?<\/p>\n

Time to get real, folks!<\/p>\n

Education and transportation each have two virtues.\u00a0 First, each of them generates direct economic returns.\u00a0 Education spending yields a return on human capital while transportation spending yields a return on physical infrastructure.\u00a0 Both are important for attracting and retaining residents and jobs.\u00a0 Second, each of them is popular with voters.\u00a0 For as long as anyone can remember, education and transportation have been two of the top issues in our elections \u2013 and they might possibly be THE top two.\u00a0 Happily, on these two issues, good policy and good politics come together!<\/p>\n

Paying for them is another matter.\u00a0 MCPS accounts for a greater percentage of the budget than any other agency with a $2.5 billion budget in FY18<\/a>.\u00a0 Montgomery College received more than $300 million.\u00a0 The Department of Transportation\u2019s operating budget was $56 million<\/a>.\u00a0 Funding increases with meaningful impacts on these agencies need to be in the tens of millions of dollars \u2013 at least.\u00a0 That kind of money far exceeds a spreadsheet rounding error.<\/p>\n

And yet, there is a way to increase spending on MCPS, the college and transportation without massive tax hikes.\u00a0 The catch is that it\u2019s not quick or easy.<\/p>\n

Let\u2019s do a simple (and yes, admittedly simplistic!) exercise with the operating budget.\u00a0 First, let\u2019s identify the combined local dollar spending on MCPS, the college and the Department of Transportation (DOT).\u00a0 Next, let\u2019s segregate out intergovernmental aid, which plays an important role in the budget but is not controlled by the county government.\u00a0 Then let\u2019s segregate debt service.\u00a0 Yes, over long periods of time, the county can adjust debt service.\u00a0 But much of the debt service is being paid on capital projects already completed, and furthermore, a huge chunk of it goes to school construction and transportation projects.\u00a0 Boosting education and transportation operating budgets by cutting their capital budgets is not the best idea in the world!\u00a0 Finally, let\u2019s subtract out local dollar education and transportation spending, intergovernmental aid and debt service from total spending and what we get is a great big category that we shall creatively name \u201cEverything Else.\u201d<\/p>\n

Here\u2019s what happens when we do that for FY11, the trough budget year of the Great Recession, and FY18, the budget that ends on June 30 of this year.<\/p>\n

\"\"<\/a><\/em><\/p>\n

What the above data shows is that the total county budget grew by 28% over this period.\u00a0 Intergovernmental aid grew by 26% and debt service rose by a whopping 58%.\u00a0 (We have previously written about the county\u2019s rapidly growing debt<\/a>.)\u00a0 Now let\u2019s contrast the two remaining broad categories: the local dollars spent on MCPS, the college and DOT and everything else.\u00a0 The education and transportation budgets grew by a combined 18%.\u00a0 Everything else grew by 37%.<\/p>\n

That\u2019s right folks \u2013 spending on everything else has been growing twice as fast as local dollar spending on education and transportation operating budgets.\u00a0 That\u2019s a strange fact in a county in which education and transportation are arguably the top two political issues.<\/p>\n

Now what would have happened if the everything else side of the budget was restrained to grow at the same rate as inflation?\u00a0 The average annual growth rate of the Washington-Baltimore CPI-U since 2011 has been 1.3%, meaning that prices have grown by 9.8% over that period.\u00a0 When we hold the total budget, intergovernmental aid and debt service constant and assign a growth rate of 9.8% to the everything else category, here\u2019s what happens to local dollars available for education and transportation.\u00a0 For the purposes of discussion, let\u2019s call this Scenario 1.<\/p>\n

\"\"<\/a><\/em><\/p>\n

In Scenario 1, $2.4 billion is available for education and transportation because of spending restraint on everything else.\u00a0 That\u2019s $383 million more than the $2 billion that was actually available in the real world FY18 budget.<\/p>\n

Holding a big chunk of county government to the rate of inflation for seven straight years is tough medicine and very unlikely.\u00a0 So let\u2019s create a Scenario 2 in which the everything else category is restrained to twice the rate of inflation, or 19.5% growth since FY11.<\/p>\n

\"\"<\/a><\/em><\/p>\n

In Scenario 2, $2.2 billion is available for education and transportation, $244 million more than the real world FY18 budget.<\/p>\n

For the sake of comparison to both of these scenarios, let\u2019s recall that the 9 percent property tax hike was supposed to raise $140 million a year<\/a>.\u00a0 (It probably raised a little less than that<\/a>.)\u00a0 So under both scenarios, the county could have avoided the giant tax hike and still had lots of money left over for more education and transportation spending.<\/p>\n

Yes folks, we understand the radical nature of what we are proposing \u2013 namely that liberal Democrats should deliberately and strategically restrain the growth in some forms of spending to boost growth in other spending.\u00a0 This is likely to be an unpopular concept in a county that has multiple jam-packed budget hearings every year with groups of all kinds requesting money. \u00a0But here\u2019s the benefit to concentrating on education and transportation: both forms of spending are investments that generate returns for the economy.\u00a0 And when those returns boost economic growth, they generate tax revenue that bolsters the entire budget.<\/p>\n

What is necessary to pull this off?\u00a0 Simply put, this requires strategy, discipline, patience and leadership.\u00a0 Without those traits, given the huge number of constituencies that want their piece of the budget, it would be impossible to focus it on education and transportation.\u00a0 The natural outcome of a budget process without strategy is that everything gets funded, a tax hike follows, voters tire of it and then they pass restrictive charter amendments and vote for politicians like Larry Hogan.<\/p>\n

So what are we going to get?\u00a0 Spending on everything followed by tax hikes?\u00a0 Or a budget that is strategically focused on generating economic returns from education and transportation?<\/p>\n

Folks, that depends on your decisions in the voting booth.<\/p>\n","protected":false},"excerpt":{"rendered":"

By Adam Pagnucco.\u00a0\u00a0 It\u2019s election season and that means it\u2019s time for lots of promises from politicians.\u00a0 And boy are they promising a lot, especially on the county\u2019s two big issues of education and transportation.\u00a0 The mailbox\u2019s \u201cprogressive leaders\u201d have \u201cplans\u201d to guarantee every child a great school, invest in transportation \u2013 especially transit \u2013 … Continue reading How to Spend More on Education and Transportation Without Raising Taxes<\/span> →<\/span><\/a><\/p>\n","protected":false},"author":4,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[151,33,338,82,38],"tags":[1545,1368,1993,1507,1990],"class_list":["post-11138","post","type-post","status-publish","format-standard","hentry","category-adam-pagnucco","category-budget","category-economy","category-education","category-transportation","tag-adam-pagnucco","tag-budget","tag-economy","tag-education","tag-transportation"],"jetpack_featured_media_url":"","jetpack_shortlink":"https:\/\/wp.me\/p4mKJE-2TE","jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/www.theseventhstate.com\/index.php?rest_route=\/wp\/v2\/posts\/11138","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.theseventhstate.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.theseventhstate.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.theseventhstate.com\/index.php?rest_route=\/wp\/v2\/users\/4"}],"replies":[{"embeddable":true,"href":"https:\/\/www.theseventhstate.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=11138"}],"version-history":[{"count":2,"href":"https:\/\/www.theseventhstate.com\/index.php?rest_route=\/wp\/v2\/posts\/11138\/revisions"}],"predecessor-version":[{"id":11143,"href":"https:\/\/www.theseventhstate.com\/index.php?rest_route=\/wp\/v2\/posts\/11138\/revisions\/11143"}],"wp:attachment":[{"href":"https:\/\/www.theseventhstate.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=11138"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.theseventhstate.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=11138"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.theseventhstate.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=11138"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}