Budget & Taxes

The state operating budgets passed in recent years have raised warning signals for the business community. This comes despite progress made with the passage of the constitutional rainy day fund in 2007. Principles established by Initiative 601 have been ignored, or simply altered when convenient. Lawmakers have deviated from using the award winning Priorities of Government (POG) budget process. Government growth is at an all time high and spending exceeds revenues.

Initiative 601, passed in 1993, initially put the brakes on state spending by tying growth in expenditures to the annual rate of inflation and population. New taxes would first need a two-thirds vote of the legislature and then a vote of the people if the tax increase caused spending to exceed the limit. In the years immediately following the passage of Initiative 601, the state had budgets that were more fiscally responsible.

The POG process was established in 2002 following the recession caused by the 9-11 terrorist attacks. POG was created to best spend taxpayer dollars while achieving the results that are most important to its citizens. The POG process is unique by departing from the traditional incremental budget approach that focuses on adjustments to existing spending levels. To be effective, the POG process must be used so that government buys only the services it can afford or is required to fund such as education.

The economy is cyclical with its ups and downs. State revenues, which come from taxes on business owners and individuals, follow that same cycle. When tax revenues fall short of spending levels, past remedies were to increase taxes and cut programs regardless of which party was in charge. While the recently passed constitutional rainy day fund is a step in the right direction, more fiscal restraint is needed to ensure long-term sustainability for our state budget and a viable economy for employers and our state citizens to prosper in the future.