Friday, August 26, 2016

You're not really helping.

Doing our weekly budget meeting the other day, Sweetie mentioned that we gave $10 or something to our nephew for his football program fundraiser. His football program fundraiser for a football program run by the school.

"Why?" I asked.

"Well, I know how you feel about those," she said.  "But the team writes everyone's name on a blackboard and shows how much each raised and I didn't want him to be zero."

So: schools are publicly shaming kids at the same time we cut taxes all around the world, transferring the burden of paying for things from everyone in equal measure to those who care enough and can afford to give something.

There is a sign in the door of the health club across town, the one we go to because Mr F loves the pool even though they think he's a terrorist because: forks.  The sign asks people to "Pack The Bus" or something: to give money to buy school supplies for kids who can't otherwise afford it, since the school won't have the extras.

So: communities are asking people with enough money to join a health club to help pay for kids with school supplies.

Over the past 10 years, budget cut after budget cut has been made at the local, state, and federal level. These cuts are almost always supported by most of people who live in the community where my nephew plays (Reedsburg, Wisconsin, is in Sauk County. Sauk County narrowly voted for the Democrat in the last governor's election, 50.9% for the Democrat. It narrowly voted for Republican Scott Walker in 2010.)

A 2014 study showed that more than 1/4 of all states had cut school funding by 10% or more in the past six years. 35 of 50 states cut school funding over that time. In the states where funding was increasing in 2014, the increase was illusory: New Mexico, for example, spent $72 more per student in 2014 than the year before, but over the previous five years had cut per-pupil spending by $946.  New Mexico students have a pretty big hole to climb out of.

In addition, state spending levels during that time may have been artificially propped up. Another review found that state spending decreased sharply after federal aid was reduced in 2012. Interestingly, despite the decreases in funding, total state spending in relation to personal incomes has remained between 8-9% (state funds only) for the past 20 years.

What does it say when spending per capita remains the same but school budgets are continuously cut? It says that budgets are not being cut across the board: If you spend 8% of your income continuously, but cut back on Expense A, that means Expenses B-Z are getting more of the same amount of money.

Many states have gone Republican over the past 10 years. Kansas is one of them. Kansas by 2015 had the lowest taxes per capita of any state. (Although it should be noted, Kansas' average of $2500 is only $200 less than the national average, period, so most states have modest if not nonexistent taxes.)  1/2 of all of Kansas' tax revenues come from sales tax, which is an unfair, regressive tax: the poor and middle-class cannot as easily afford to pay a flat-rate tax like a sales tax. Almost none of Kansas' revenues come from property taxes. (In 2009, to make up revenue shortfalls, the sales tax was increased by 1%.)

The vast majority of state spending is done on education and human services.Wisconsin -- another recent Republican state -- spends 50% of its total budget on education and human services. Connecticut spends about 50% of its budget on those two items. Florida, 58%.

 Kansas, meanwhile, spends about 90% of its money on those two items. 90%.  Why is Kansas' percentage of spending so out-of-whack? Because Kansas has no money.

What do states do when they have no money? They cut spending. In Kansas, government spending increased by 0.7% in 2015 -- less of an increase than the year before, and less than the rate of inflation. An increase of less than the rate of inflation is a budget cut. If your expenses are 10% higher this year than last, and I give you a raise of 5%, you will have to cut back on something. Kansas' Republican governor, Sam Brownback, vows to continue to reduce spending by Kansas government. Since only 10% of Kansas' spending goes to anything but schools and human services, guess which expenditures will continue to bear the brunt of these cuts?

This year, the Kansas State Supreme Court ordered Kansas to find a way to pay for schools for 2016-2017 or "the schools won't be able to open."

One of the problems the Kansas courts found? The poorest systems received $54,000,000 less in funding under the state's scheme -- the exact word for this program -- for funding schools.

What do states do when they run out of money? They raise taxes. Kansas, under Brownback, increased taxes in 2016. The taxes they increased? They raised sales tax again. They reduced tax deductions for middle class workers -- a tax increase by backhand -- and imposed taxes on managed-care facilities. Kansas literally taxed the sick and the poor to help make up a budget shortfall.

What do states do when money runs short? They borrow. The last two 'debt certificates' Kansas has issued were records: $840,000,000 in 2015, $900,000,000 in 2016. A 'debt certificate' is temporary borrowing by IOU. The state describes this as "borrowing from itself." That is incorrect. They are issuing bonds to investors. A bond is, as you probably know, a promise that if you give the state money now it will pay that money back later, with interest. Kansas' total debt in relation to its state gross domestic product is 17%.   Its credit rating was downgraded during Brownback's regime, meaning that it costs more for Kansas to borrow: they are a subprime borrower and have to pay higher interest rates (just like you and me!) The New York times said in 2014 that because things were so bad in Kansas, Brownback faced a stiff election challenge.  It was in fact, stiff: Brownback lost in seven counties. The other 100 or so voted Republican. Public debt has risen by 3,000,000,000 dollars in Brownback's tenure. Three. Billion. Dollars.

The financing of government by borrowing has the effect of using government money to pay investors, rather than to provide schools or roads or human services. Just as increased interest rates on your debt would leave less money for groceries and more for banks, Kansas has the same thing going on.  Bond spending cannot be cut back, not without a fiscal crisis.

Kansas' general fund is nearly $200,000,000 lower in 2015 than it was in 2014.

State budgets are complex things not easily reduced to a few paragraphs. Let me take this complex issue and reduce it to a few paragraphs:

1.   When you vote for anyone who promises a "tax cut," know that IN ALL OF HISTORY NO TAX CUT HAS LED TO GREATER GOVERNMENT REVENUES. When you vote for a 'tax cut' you are voting for reduced spending by the state or federal government.

2.  50% or more of all state spending is education and human services. When you vote for a 'tax cut' you are voting to cut spending on education and human services.

3. When you then give money to school fundraisers, or charities performing those fundraisers, you are voluntarily opting to increase your own taxes. Those things used to be paid out of school budgets.

On that note: even the best charities spend 10-20% of their money on paying their employees. In many charities that ratio is far higher. But more importantly:

The wealthy give a smaller percentage of their income to charity than the poor. Conservatives are more likely to be wealthy than liberals. The majority of conservative donations goes to their religious organization. Which means:

4.  When you give money to school fundraisers, you are allowing rich conservative Republicans to put their money elsewhere while you fund a disproportionate share of the public burden. Where do they put their money? Many times, investment funds that buy state bonds. So the $10 you gave your niece to buy wrapping paper as a fundraiser helped pay interest on a bond to a hedge fund.  :(

1 comment:

Andrew Leon said...

I was really hoping that Trump would somehow break the Republicans, but that doesn't look like it's going to happen. :(