Spend less to tax less

Lt. Governor Tim Griffin says tightening state government's finances is the necessary first step to cutting taxes.
Lt. Governor Tim Griffin says tightening state government’s finances is the necessary first step to cutting taxes.
By Steve Brawner
© 2016 by Steve Brawner Communications, Inc.

Lt. Governor Tim Griffin is pushing an idea: Cut spending first and then cut taxes. It’s so crazy it just might work, which is why he wants to try it in Arkansas and why, hopefully, someone will try it in Washington, D.C.

Griffin, who has announced he is running for re-election in 2018, points to the state’s ranking in the high 40s in many areas. Sitting across the table from me in a Little Rock coffee shop, he said the state can’t get to the top by tweaking. “Bold is the only option” he said.

A top priority would be the state’s income tax. It ranks in the middle of the country, according to the Tax Foundation, but the top rate, 6.9 percent, is tied for 14th highest and hits all filers with incomes of $35,099, which is not exactly Walton money.

Arkansas’ top rate is higher than all its surrounding states, including Texas, which has no income tax. Thus the state is at a competitive disadvantage, which is one reason Gov. Asa Hutchinson wants to cut income taxes next year, as was done in 2015. Hutchinson probably will propose relatively modest cuts. Griffin wants to go big.

The problem, Griffin says, is that elected officials who talk about tax cuts run into a brick wall erected by those who argue that the state won’t have enough revenues to meet critical needs. To get past that, the state must make reforms to meet those needs with fewer dollars.

The simplest way of looking at how the state spends money is its general revenue budget, which in fiscal year 2017 is $5.3 billion. Griffin says making government 10 percent more efficient, which is really doable, would free up $530 million – enough for a substantial income tax cut along with increased spending in other areas, such as highways.

Griffin is talking about not just cutting waste, fraud and abuse, but instead undertaking systemic reforms of state agencies, many of which he says were designed before the remote control was invented. He says if a boat is designed to require six rowers, it does no good to try to propel it with four. Instead, change the boat so it only needs four.

“Make smart government your focus. … If you just cut, you still have the same inefficient systems in place that require the inefficient resources,” he said.

Last year, Griffin undertook a review of the state’s massive Department of Human Services, which takes care of a lot of the state’s neediest residents and is a mess. Its new director, Cindy Gillespie, now is reorganizing it. Griffin wants to see the same effort undertaken across state government. He started by cutting one position from his three-person office.

Griffin says state government has a moral obligation to spend taxpayer dollars efficiently. He says Arkansas must be competitive with other states. And, it must prepare for the day when the debt-ridden federal government starts sending less money to Arkansas.

And that brings us to Washington, D.C., where Republicans adhere to two entrenched beliefs that are very different from what Griffin, a former Republican congressman, is describing. One, “starve the beast,” says government can be shrunk by depriving it of money through tax cuts. The other belief is that tax cuts generate so much economic growth that spending cuts aren’t really necessary. Donald Trump’s plan reflects that belief – tax cuts without spending cuts – which is why the Committee for a Responsible Federal Budget says it could add $11.5 trillion to the national debt.

Republicans in Washington over the past few decades have pledged allegiance to those two beliefs, enthusiastically cutting taxes without insisting on cutting government. Democrats shook hands on that bargain because they like to spend without taxing, too. The result has been the national debt ballooning from $1 trillion in 1981 to $19.4 trillion today. Unfortunately, money did not grow on trees, and the beast wasn’t starved because it could reach across the table into the future and steal food from the plates of our children and grandchildren.

All of this should make perfect sense to those of us who live on a budget. If you are struggling to make ends meet, you look for waste and inefficiency in your spending first, and certainly before you switch to a lower-paying job.

It makes sense in government, too, where being smart should be the focus, and where the state of Arkansas is a good place to start.

Related: If Trump or Clinton succeed? More debt.

3 thoughts on “Spend less to tax less

  1. Great article. Budget in political terms seems to be a number you set aside for what you want to spend. It seems to get further and further away from the actual funds AVAILABLE TO spend as time goes on. If we all lived like our government, we would have nothing. Worse than that, with the debt that’s building, our own kids for generations, may suffer that consequence. I drove past the VA yesterday, noting the millions solar project that is still just sitting there. It’s terribly disheartening.

  2. I did a little research, Arkansas population 2.98 million, Tenn=6.5;Miss=3.0;Okla=3.9;Mo=6.09;La=4.69;Ala=4.8 —Avg income in Ark $36,086-only Miss is lower all the rest are 42-r higher’d; Ark severance tax on natural gas is still the lowest and most of it goes to Indiana; only Miss has a lower Gross domestic product;Arkansas has the lowest electricity price at $8.29 per kw/hr.. Of the oil producing states around us we have the least 0.12% of the total U.S. production. So Arkansans have to pay more in taxes because we have the smaller population the smallest oil reserves,the lesser tax on natural gas,and drive the the most per resident at 13,551 miles. Reducing spending then reducing taxes might work if Arkansans wish to pay more in college tuition, more for services not offered by state agencies, willing to pay more for nearly everything and giving away our natural resources to manufacturing companies that are here today but gone tomorrow when they find out that incentives don’t include things they get for nothing in other states.

    Sorry Tim you should have stayed in Congress where you could help with future gridlock.

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