Monday, June 23, 2008

Look! It’s a Distraction! From the Budget!

Dogs and cats living together, Le and Sam agreeing – talk about disasters of biblical proportions. My suggested headline was above but the editor tweaked it.

East Valley Tribune, Jun. 22, 2008

It’s June 22nd. Do you know where your state budget is?

With few days remaining, really good ideas for closing a massive budget gap are in high demand. The new fiscal year starting July 1 has a $2 billion deficit, so we need only $285 million per day (assuming they take Sundays off).

That seems an impossible task for this legislature, something requiring divine intervention. That’s Old Testament, human sacrifice, dogs and cats living together, mass hysteria divine intervention. So to encourage the impossible, here’s a once-a-millennium event:

I agree with Le Templar.

It won’t happen often, but the Tribune’s senior opinion writer got it right in his blog post on the so-called economic stimulus and job creation package unveiled last Thursday by House Commerce Committee chair Michele Reagan, R-Scottsdale. Her press release described it as “a new effort to bring thousands jobs to the state.” (Plenty jobs, few prepositions.)

The legislation would create a tax-increment financing “entertainment district” south of Chase Field for an owner of the Diamondbacks; let Pima County create a Cactus League stadium district; and give tax credits for research and development and for solar energy businesses. You got your tourism and entertainment, lots of baseball, and clean energy. They left out biomedicine and conventions, but otherwise touched ‘em all when it came to economic development hot topics.

Le dislikes the stimulus package for two reasons. First, as a good libertarian, he objects to legislative benefits for favored businesses in “hot” industries or select locations. If tax credits and waivers boost the economy, he wants them for everybody, not just “a select few that hire the right lobbyists or use the most powerful buzz words.”

Second, Le notes, putting out this package on June 19 “is a political maneuver to keep the rank-and-file lawmakers interested and optimistic while legislative leaders sit in the backroom wringing their hands over a budget they can’t finish.”

Le’s second comment is totally correct. You’ve got a huge budget hole and you’re running up against the state constitution’s requirement to have a budget on July 1. The only reason to roll out some new whiz-bang proposal now is as a distraction. Each of these proposals has been wandering fruitlessly around the Capitol this session, but none got approved -- and blending each dish together in a last-minute casserole won’t make it tastier.

Why is the Legislature like a singles bar? Because these ideas haven’t gotten better but you might think they’re better-looking as closing time approaches.

As for Le’s first complaint, I’m not a good libertarian (to say the least!), so I don’t object to government making choices; that’s what government’s supposed to do. I don’t have a huge problem with the package’s “somewhat awkward political compromises” (what you would call logrolling.) You get the liberals with solar energy and Pima County legislators with their new stadium so you can give away the store (in the future, of course) to the Phoenix developer with baseball tickets. That’s politics.

But this rag-tag collection of pet projects is the wrong stuff at the wrong time. Our economy already is overly dependent on development. Construction jobs are temporary and cyclical. And each of these “stimulus” items has a long fuse, so any economic benefits arrive after the business cycle already has turned.

Actually, it’s worse than wrong; it’s unoriginal. In the 1980’s, developers used to argue for their zoning cases by claiming the projects would create jobs, then the project would never get built. In the 1990’s, high tech companies claimed that having to account accurately for options would kill jobs. This decade, we got the American Jobs Creation Act of 2004 from President Bush and the GOP Congress. (Yes, I’m sure you really benefited from the manufacturing deduction that replaced the foreign sales corporation/extraterritorial income provision.) Hey -- shouldn’t that law be creating jobs right now, making this ungainly grab-bag of state proposals irrelevant?

This isn’t an economic stimulus package. It’s hype from shills, distracting you with bright, shiny objects. It’s this decade’s version of the Superconducting Supercollider. And July 1 looms.

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