Predicting the future isn’t easy. If it was, all those expert prognosticators wouldn’t have been so wrong about flying cars, food pills, the Chicago Cubs’ chances to repeat as World Series champions and Hillary Clinton’s electability. Not to mention the weekend weather.
Even so, it’s not all that difficult to prepare for what promises to be an uncertain tomorrow. Don’t invest in anything with the words cold fusion, “lose weight without dieting” or J.C. Penney in the title. Do own a good flashlight, and don’t forget extra batteries. Always remember that an additional six-pack of beer never goes to waste.
In short, be ready for everything to go badly. If it doesn’t, the worst you’ll face is still having your money, a dependable source of illumination and some unopened brewskis.
If the Maine Legislature adopted this attitude when it came to budgeting, the state would be far better off. Because the financial outlook for the next two years appears unsettled at best.
As you read this, I’m still on vacation, so I don’t know what happened with the budget standoff in Augusta. There could have been some kind of compromise. Or we could be in the midst of a state shutdown. It doesn’t matter. Well, it matters to some people, but it doesn’t really affect the point this column is about to make, which has been carefully crafted to be valid regardless of whatever is occurring, thereby giving my editor the impression I’m paying attention to current events rather than drinking beer and shining my new flashlight in the faces of unsuspecting passersby.
When legislators put together a new budget, they rely on experts to tell them how much revenue will be available over the next biennium. These experts are economists, so they develop their models by using complex formulas that produce results that aren’t readily discernable from wild guesses. It’s no giant surprise their estimates are often wrong. Nevertheless, the budget drafters accept them because that way they can always use the poindexters as fall guys if everything goes south.
This time around, the economists have predicted state revenues will grow a little in the first budget year and a little more in the second. So, legislators have been operating as if they have extra money to play with. Too bad neither they nor the economic experts are paying attention to the real world. If they were, they might have noticed this item in a Washington D.C. newsletter, The Hill:
“Two out of every three states in America took in less tax revenue than expected this year, the worst performance since the depths of the recession, and twenty states expect to address budget shortfalls in the coming year.”
Most of this red ink can be attributed to sales taxes, which are coming up well short of projections. That’s a big concern, because, as the article notes, “sales taxes are traditionally the most stable revenue sources for states.”
Is this something that Maine, being a state and depending on a sales tax, should be concerned about?
Oddly enough, it is. Maine’s sales tax is one of the narrowest in the nation, relying heavily on purchases of vehicles and home improvement products. At the earliest sign of an economic downturn, these are the first purchases most people put off. As a result, this state is particularly vulnerable to any weakness in the national economy. (We could alleviate some of this problem if we expanded the sales tax to include entertainment and services, but when Democrats passed a law doing just that, Republicans rallied the voters to repeal it, and when GOP Gov. Paul LePage proposed something similar, both his fellow Republicans and opposition Democrats rejected the idea without debate. Why? Possibly because they’re idiots.)
At the moment, Maine has a budget surplus and nearly $125 million in its Rainy Day Fund, so there doesn’t seem to be reason for concern. But to provide a little perspective, it costs about $19 million a day to keep the government operating, so all that extra cash would cover the nut for less than a week.
After that, we’d have to sell the Blaine House to buy a decent flashlight and a few beers. Or we could invest in J.C. Penney stock.