Tax Amnesty… Robbing the Next Budget to Pay for the Current Budget
Don’t get me wrong. I am not opposed to tax amnesty. It did bring in an extra $200 million in the past 2 months, which in “teacher units” means we will be firing 2,000 fewer teachers this summer. But the corporate media and some in the legislature have misled the public into believing this is some kind of free money that will somehow relieve the pain of a agreeing on a budget deal for the next biennium. Sadly, just the opposite is the case. This $200 million we got now means we will get $200 million LESS in the next biennium – as this was money owed mainly by wealthy corporations with the ability to pay and money we would likely have received in the next biennium.
We need the money now, so I am glad we got it. It means we will be able to keep our teachers for one more year. But it actually makes the budget shortfall problem WORSE for the next biennium – not better. The claimed budget shortfall for the next biennium is $5 billion. But that is based on an unrealistic assumed rate of growth in State revenue of 13%. It is likely that revenue will only grow by 3% of less – bringing the real budget shortfall for the next biennium to $7 billion or more. So instead of firing thousands of teachers this summer, we will be firing them all next summer.
Ironically, getting the extra $200 million has only hidden the ever worsening budget crisis. It did this by artificially propping up revenue for the past three months. For the past year, the total revenue shortfall has been $1.2 billion – or about $100 million per month. But the March and April revenue reports (which includes collections from February and March) came in rosier than past reports. Now we know why. It was not only due to changing from quarterly to monthly sales tax collections (which also artificially propped up revenue), but due to the tax amnesty program bringing in an extra $200 million. Sadly, by the June 10th revenue report, both of these changes will come back to haunt us as May collections (reported on June 10th) should return back to the $100 million per month revenue shortfall pattern of the past year.
Where the $200 million will help is in addressing the current year budget shortfall. Both the House and Senate have agreed that whatever the current year budget shortfall is, they are going to make it up by failing to make the June Basic Education payment to School Districts (ignoring the fact that failing to make this Basic Education payment is contrary to Article 9.1 of our State Constitution and also contrary to several Supreme Court rulings).
This June Basic Education payment is supposed to be over $400 million and my past calculations have led me to conclude that the entire June payment to schools would be wiped out – leading to the firing of about 4,000 teachers this summer. However, with the extra $200 million, it could be that only $200 million of the June payment would not be made – meaning that “only” 2,000 teachers will be fired this summer. We will not know until June 10th how bad this problem will really be. But whatever it will be, it would have been $200 million worse without the tax amnesty program.
Still our legislature and the corporate media need to be more honest with the public about what will happen in the next biennium. That problem has just gotten worse by $200 million – increasing the likelihood that 2,000 more teachers will be fired by the summer of 2012. The only solution to this problem is to roll back the billions of dollars in tax breaks we are currently giving to major corporations. These tax breaks include a BILLION per year tax break to Microsoft. I therefore propose that what we need next is a Tax Amnesty program for corporate tax dodgers. If they start paying their fair share now, we will forgive them for the tens of billions of dollars they have been robbing from our children during the past ten years.
Regards, David Spring