Feb

3

A closer look at “Revenue Enhancements”

Filed Under Uncategorized 

OFRG will be taking some time to look through the Governor’s budget proposal to let you know about the consequences of some of the revenue enhancements he proposes in order to spend $6.9-billion in FY 2011 instead of the $5.3-billion authorized by the Board of Equalization.

Accounting gimmicks are used quite a bit in the Governor’s budget.  One plan would have certain franchise taxes due in June instead of July 1st so that the nearly $8-million would be captured in FY 2011 instead of FY 2012.  Another would require that certain sales and use taxes be sent to the state twice per month instead of once per month.  That would allow half of June 2011’s remittances to be submitted in FY 2011 instead of all of the money being submitted in July 2012 which is a different fiscal year.  The Governor does that in order to have nearly $5-million in his budget instead of the FY 2012 budget which he apparently doesn’t care about since he won’t be in office. 

The problem with that, of course, is that those two accounting changes would increase the budget gap for FY 2012 by about $13-million.  That’s on top of the $696-million gap that will already exist because stimulus funds will be gone.

It’s this kind of short-sightedness that can have long-term effects on the state’s economy.  It would be far better for the state to find $13-million in programs to cut than rely on one-time gimmicks that serve no purpose other than to keep government spending high and pass the problem on to a different governor.

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