Wednesday, March 26, 2008

Legislature?s irresponsible political tax breaks

Despite the shopworn aphorism that "government is the problem, not the solution," state government has profoundly important roles and responsibilities in the lives of its citizens that cannot be adequately and responsibly met without proper resources.

Thus, when Idaho state legislators hand out tax breaks they euphemistically call "incentives," they're engaging in de facto irresponsibility by shrinking state financial resources and denying sufficient support for necessary programs.

This week, lawmakers were on their way to incrementally repealing the tax on business equipment, amounting to a relatively modest loss of $110 million per year or thereabouts to the counties. It would be replaced, legislators promise, from new revenues brought on by growth.

The flaw in that economic reasoning is that growth will require new spending for essential services and the revenues earmarked as replacements for the lost business taxes will be needed for new services.

Lawmakers also are prepared to exempt some taxes on a huge new uranium processing plant in eastern Idaho as an—here's that word again—"incentive" for the French owners of the corporation to locate in the state.

Already on the books are an estimated $1.6 billion in tax breaks and incentives—and the best guess is lawmakers don't have an inkling of the complete list of who and what has been exempted.

No private business could be run the way the state is being managed financially.

If a corporation were to neglect its facilities the way legislators have neglected the public school system's classroom facilities, the Occupational Safety and Health Administration would shut them down as menaces to safety and health.

If a corporation relying on a balance of income and expenses to operate had as many customers on the books who don't pay the full price (as beneficiaries of Idaho tax breaks), quality of products and services would soon suffer because of cost cuts.

Idaho is showing wear and tear in its operations and doing scant little in repairs. Major state roads are in need of major repairs. Bridges, too. School facilities that legislators were ordered a decade ago to repair are shameful.

But the tax breaks and "incentives" continue.

States complain that Washington is neglecting the nation's infrastructure and allowing essential facilities to collapse into disrepair.

Yet Idaho is emulating the same negligence by failing to maintain public services while it doles out questionable tax breaks.

That may be good politics, but it's poor fiscal policy and even worse financial management for a state with growing demands of a growing population.

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