“Sedated, we’re nursing on a poison that never stung…” –Hozier
Hozier was in town Thursday night performing a summer, outdoor rock and roll show at The Farm Bureau Insurance Lawn at White River State Park. The Irish singer/songwriter mentioned multiple times during his set what a great venue it is. And he’s right about that. When he sang “Sedated” about halfway through the set, he was really talking about the hypnotic effect of young love, not Indiana’s $2 billion budget surplus. After all, Hozier is from Ireland, and rocking out a song about Indiana finance would just be creepy.
But state government’s hypnotic attachment to our aging and stagnant surplus is even creepier to me. Thinking about The Lawn, the investment the state made into the state park, and when it was made, got me thinking a little about how times have changed. It has become the standard for state government to hold $2 billion of our money with no intention of using it. All in the name of fiscal prudence. It is just fundamentally wrong.
Oddly, taxpayers aren’t circling with torches, demanding their two or three hundred dollar refund. I would understand if they were, but they aren’t. So then why am I even writing about it now? There is a reason, and it has little to do with the Hozier concert.
The U.S. Bureau of Economic Analysis released a report this week showing Indiana’s economic growth ranked shamefully in 44th place. We rank last in the Great Lakes Region, and behind Kentucky as well. This report should be alarming to Hoosiers. From the report, the growth in Indiana’s gross domestic product in 2014 was reported at $1.4 billion, or 0.4%. That growth in GDP is less than our state’s budget surplus. In fact, our annual growth has been less than our budget surplus three of the last four years. Now let’s think this through shall we? If the budget surplus was refunded to Hoosiers, and completely spent on Hoosier products and services, we would more than double our economic growth for the year. That move alone, would move us from our embarrassing ranking in the mid 40’s to a merely disappointing ranking in the mid 30’s.
Operating government with budget surpluses is as wrong as operating in a deficit. Let me explain why. Any surplus is generated by taxes that were collected for the purpose of operating government. When excess taxes have been collected, an error has been made. No taxpayer willingly pays a tax for the purpose of a unit of government putting it in the unit’s savings account. Ever. A surplus should only exist when tax revenues were surprisingly good. Even then, the surprise revenue needs corrected. Deficits are errors and occur during surprisingly bad revenue periods, again, never purposely. These errors are corrected in a more panic stricken way via spending cuts almost exclusively these days. But they are corrected nonetheless, and far more quickly.
The surplus we have now is not as a result of an error. It exists solely for political value, and as a taxpayer, I find that valueless.
It is often referred to as a “rainy day fund.” That was once a believable descriptive, but no longer is. Mainly because of all of the “rain” that has fallen since the surplus first existed—three or four budget cycles ago. Think about that for a moment. What could we have done, and didn’t, because we didn’t have the money, in the last six or eight years in Indiana? The list is suffocating. If we don’t plan to use it, we should give it back.
The fiscal goal should be to hit the revenue/spending mark at zero, not to aim $2 billion above our need and erroneously declare that the target. The truly conservative approach to our current situation would be to either refund the surplus, or whittle away at it through a small tax reduction until it is gone. The liberal approach would be to find the best governmental uses for it, and spend it until it is gone. Protecting the over collection or under spending of tax revenues as if it is some purposeful safety net doesn’t have a platform to call home. Hanging on to it for the sole purpose of a fictitious measure of success is more like malfeasance than prudence.
In response to the BEA’s report this week, a spokesperson for Governor Pence responded by touting Indiana’s national attractiveness as a place to do business. But the reasons the publications that list Indiana as a top twenty “state to do business in” do not list the surplus as a reason. And our ranking on these lists put us in the teens (#15 in Forbes) more often than a “top” state as many in the statehouse brag. I wonder how those businesses would feel if state government gave their customers $2 billion more to spend at their business by making a relatively simple policy decision.
Conservatives and liberals alike should learn to agree on the uselessness of the budget surplus. If they can’t, taxpayers and voters need to force them to quit celebrating it.
The surplus has simply become a drug on which the Indiana political world has grown dependent. It has been portrayed to voters and taxpayers as evidence of good stewardship, and the public has bought it enough times now to make it appear that they are also comfortably addicted. It seems like we are “sedated.”
Which leads me back to Hozier. He was right about The Lawn. It is a great venue and a great addition to that state park. I’m glad Indiana built it. But now that we have this great surplus stashed away in our savings account, we seem to be more comfortable hiding behind it than doing great things with it. Ironically, The Lawn would never be built in the boom times of today.
The end of the song’s melody says “we are deaf, we are numb, free and young and we can feel none of it.” On this one, that sounds just about right.