11/18/2002
KUFM / KGPR
T. M. Power
The Biennial Raid on the Coal Tax Trust Fund
Here we go again! After a very public process of recommending deep cuts in state programs that would do serious damage to our schools, colleges, and low income health programs and letting various constituencies respond in horror, the Governor has now announced that these emotional responses caused her such anguish that she too believes that those cuts are not acceptable. So she has proposed tapping into the Coal Tax Trust Fund to find about $100 million to protect some of these programs. This has been carefully contrived political theater aimed at trying to paint those who support public education and health care programs into a political corner, forcing them to support a two decade-old, so far unsuccessful, effort to raid that trust fund.
The Governor and her staff insist that the state has no alternative. Higher taxes, they tell us, would undermine the state economy, making us even poorer. You would think that after 15 years of this mindless mantra, we would have caught on. For all of that time, we have been busily cutting the taxes paid by large corporations and businesses with the promise that that would bring an economic renaissance to the state. Yet, judged by the very economic measures used to justify the urgency of tax cutting, average pay and income relative to the rest of the nation, we have only slipped further behind. Year after year there continue to be fiscal crises in state government as a result of those tax cuts. This year is no different. Obviously there are a whole group of slow learners in control of our state government.
They see government as only a source of economic problems, never as an important partner in laying the basis for a productive economy. The foolishness of this irrational ideological position can be seen by looking closely at the sources of economic growth in the 20th century. The productivity of our national economy has been systematically boosted by the dramatic improvements in the quality of our workforce and the technology it works with. The government has been centrally involved in both of these.
The adoption of universal public education through high school significantly boosted the sophistication of our workers. After the Second World War, the GI Bill laid the basis for also opening college education to an increasing number of middle- and working-class families. The health of our workers and their families was also boosted by public health programs that made drinking water and basic foods safe, improved sanitary conditions generally, and found ways of preventing many of the more common diseases that regularly disabled millions of men, women, and children.
The electronics technology we now take for granted, including the Internet, grew out of government military research programs. The transportation infrastructure that we now rely on also was developed with strong government support: the land grants and other subsidies that extended the rail system to most towns; the Interstate Highway System that now links the nation together and also links rural to urban areas; the jet aircraft technology originally developed for the military and the subsidies that continue to support our airlines and airports are all examples of this active role of government in building our basic economic infrastructure.
From this point of view, the anti-government ideologues who are in power in Montana have actually adopted an anti-economic development program aimed at crippling our schools, our health care system, and our basic public infrastructure, all in the name of reducing taxes on businesses. It is a race to see how primitive they can make Montana as a place to live, work, and do business. It is an approach that has worked nowhere else, has not worked here for the last decade and a half, and will not work in the future. These ideologues are simply digging the state into a deeper and deeper hole by attacking the very basis of a productive economy.
Now they tell us that if we want to save these basic government services, we have to tap into the Coal Tax Trust Fund, the only state savings account they have not already been allowed to raid over the last fifteen years in order to transfer that public wealth to large corporations through lower taxes.
There is a basic dishonesty to the very idea that the Coal Tax Trust Fund is a pot of money sitting around unutilized, a potential just going to waste. We have been using this trust fund since the day it was created in the same way that a family or retiree or a non-profit institution draws on the income from savings accounts, investments, and endowment funds. In general, it is never a prudent idea to spend your capital. Once you have done that, the income that nest egg provided will be gone and you will be permanently poorer. That does not mean, of course, that you do not invest those funds wisely. But that is not what the Governor is proposing. She wants to draw down this state endowment fund to cover normal government operations. She would spend about a sixth of it just in this biennium. But doing so will not close the hole in the state’s budget created by continuously cutting taxes over the years. So that hole in the budget will continue and each time the legislature meets, it will have to raid that state savings account still more. That will actually make the hole in the budget larger and larger because as that endowment fund shrinks, the interest earned on it and spent to support state programs will also shrink. We will be in a race to completely deplete that savings account. Then what will be done?
This is a strategy to impoverish state government by those who do not believe in the legitimacy of that government to begin with. That may serve their ideological fantasies, but it does not serve Montana or its citizens. Making Montana a place of weak and declining schools, a place with decaying public infrastructure, and a place where even the most basic of public services are anemic or non-existent can only undermine Montana as we try to find our place in the America of the twenty-first century.