Spending
The Problem
Nevada faces a budget deficit of $2.266billion. In 2011, legislators will be faced with two options: continue unchecked, hasty, and unjustified growth in government spending augmented by “increased revenue,” – in another word, taxes – or trim the projected cost of running the state. Increased revenue inevitably translates to higher taxes for individuals or businesses that might use the money that is taxed away to create new jobs. Attempting to fix a budget deficit, the Governor of Michigan hiked business taxes last year. Not surprisingly, 1/3 of the expected revenues never made it to the state treasury.1
Have a look at some our spending problems:
- The last legislature approved a budget that will spend 31.2% more per-person—even adjusted for inflation—than just five years ago with no increases in the quantity or quality of services.2 This means we’re spending $975 more per Nevadan for the same services.
- The average Nevada State employee makes 12% more than the national average for state employees, and 28% more than comparable private-sector jobs.3
- 40% of state employees are eligible for retirement in the next 10 years. The Public Employee Retirement System is only 77% funded, leaving us with an unfunded liability of over $6billion.4
- State employees received a cost-of-living increase even while the cost of living in Nevada decreased over the last two years. This “rollover budgeting” costs Nevada $1billion every two years.5
The Right Ideas
The National Bureau of Economic Research recently conducted a study of 21 nations in the Organization for Economic Cooperation and Development. The findings were clear: robust growth in business and jobs is almost entirely caused by the lowest possible business and income tax. Any legislator, to best serve Nevada, must consider all other options before tax increases. Nevada’s families are cutting unnecessary and wasteful spending. Nevada’s government should do the same. We need long-term innovation and restructuring of how Nevada does business to put an end to the vicious boom-and-bust cycles.
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[1] “Granholm’s Tax Warning.” Available from http://online.wsj.com/article/SB121192942396124327.html; Internet; Accessed 18 Nov. 2009.
[2] “What Revenue Problem?” Available from http://www.npri.org/publications/what-revenue-problem; Internet; Accessed 06 Jan. 2010.
[3] “State to State comparison of public employee Compensation levels.” Available from http://www.lvchamber.com/files/pdf/FAB-state-to-state-comparison.pdf
[4] “An Overview and Comparative Analysis of the Nevada Public Employees’ Retirement System.” Available from http://www.lvchamber.com/files/pdf/FAB-retirement-system.pdf
[5] “Review and Report Card” Available from http://www.npri.org/docLib/20090924_2009LedgeReportCard-Web.pdf; internet; Accessed 06 Jan. 2010.