Wednesday, July 15, 2009

The Fiscal Quagmire of "Revenue Sharing"

Or, the taxpayer giveth, and the Government taketh away.

I’m not sure when the concept of “revenue sharing” between the levels of government began, but I’m pretty sure it’s been in my lifetime, and perhaps no more than 40 years ago. But I am sure that it has turned out to be an addictive, destructive, and expensive failure, especially when the founders’ ideal of limited government is concerned.

OK, let me be magnanimous for a moment; the first layer of paving on this particular road to hell likely consisted of good intentions. Since then, the road has been resurfaced dozens of times, and the good intentions are buried deeply beneath layer after layer of political manipulation and pork.

A number of decidedly ugly consequences result from revenue sharing. The first is that it fuels the popular perception that government money flowing in our direction is somehow “free.” This is the phenomenon made ever so real here in Brunswick as the majority of the town decided that the new Elementary school is all but free, because the “state is paying for it.” I remember statements like “if we don’t build it, someone else will get the money that should have been for us.” And “why would we turn it down…it’s not costing us anything!”

Not to mention the annual sums the town receives as general revenue sharing and aid to education. Such sums are determined by formulas developed by state politicians who inevitably find themselves in the role of choosing winners and losers as they allocate the resources across the state. And what a wonderful opportunity to prove to your constituents that you were able to manipulate legislation to favor your district!

The ever popular “dollar leveraging” is another route to “free money.” “If the town puts up X, the state will put up 4X.” How can you lose in such an arrangement? The reality is, to those who notice such things, that this is enabling behavior feeding an addiction, complete with all the rationalization exhibited by drug addicts.

The same pathologies exist in the relationship between the Federal Government and the states, which have become all too dependent on “free monies” flowing from Washington. How many times have you heard “it’s a great deal; every dollar the state spends draws down 3 federal dollars,” the clear implication being that those dollars are “free” as well. You can just hear the wheels turning in Augusta as they come up with clever ways to invoke promises of Federal dollars, no matter what the consequences might be. Hell, you can’t turn down such easy money! That would be irresponsible, right?

There’s an even darker side to such arrangements, however. And that’s the fact that regular shipment of funds from the next higher level of government provides a convenient bogey man for the officials in the receiving body. It allows them to point the finger elsewhere when taxes go up, as they inevitably do. For years, Jim Ashe, the former Superintendent of Brunswick Schools, would blame the state for causing the increase in school property tax support because they “weren’t sending us enough.”

In other words, it wasn’t spending that was the problem, but the failure of others elsewhere to cover the increases with free money from afar that somehow is treated as if none of us had anything to do with providing those sums. If I could only cite one fact to prove that the average citizen is clueless, it would be the absolute inability to grasp the simple fact that all government money comes from us, one way or another, no matter who the check is from.

In a similar vein, the state has for years cited “federal cuts” as the reason for huge “structural gaps.” I tired of explaining that the feds had increased funds flowing to Maine by over 60% during the Bush administration, because such facts were easily trumped by the immense hatred of the President. It simply couldn’t be true because it contradicted with the prevailing view.

While these systemic issues are enough to wish that revenue sharing had never been instituted, there is a deeper principle involved. I can’t think of any reason why someone in, let’s say, California, should believe they have a right to have someone in Maine pay for some of their state government foolishness, nor any reason why someone in New Hampshire should pay for any of Maine’s foolishness.

At the local level, I don’t believe anyone in “the county” should feel an obligation to pay a penny towards Brunswick spending, and vice versa. And it only gets worse when you put manipulative politicians in between the donors and the recipients, because it goes without saying that the first priority will be to make the arrangers look good, rather than to do good.

This country and its insatiable appetite for government spending at all levels is in serious trouble, and we may never recover from the hole being dug. The last thing we need in such circumstances are a belief that money falls from the sky, and a ready excuse for elected leaders to blame someone else for their excesses.

Oh…and one last thing. Since the feds can’t look to a “higher government” for more “shared dollars,” they simply print and/or borrow what they need, which is the terminal stage of the “free money” pathology. This is the stage where we become easy pickings for another governing body, whether by a hostile or friendly takeover. If not literally, at least figuratively.

Quagmire, thy name is revenue sharing.

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