Monday, June 11, 2007

NYT surprised that tax cuts led to more revenue

From the Old Gray Hag:
State lawmakers across the country, their coffers unexpectedly full of cash, have been handing out tax cuts, spending money on fixing roads, schools and public buildings, and socking something away for less fruitful years.

Budget surpluses have largely stemmed from higher than expected tax collections — corporate tax revenues alone were 11 percent higher than budget estimates — and booming local economies. There has also been some relief in Medicaid spending, which fell from an 11 percent annual growth rate to something closer to 7 percent in the past few years.

More than 40 states have found themselves with more money than they planned as they wound down their regular sessions. Governors in 23 of those states proposed tax cuts, and a majority of states with surpluses chose to shore up their roads, schools and rainy day funds. For example, lawmakers in Utah agreed to a $1 billion bond act to fix state roads and add lane miles, while in Idaho state spending on education outpaced that on Medicaid for the first time in 20 years.

The extra cash over the last two budget sessions (many states work on a two-year cycle) is at the highest level since 2000, state budget experts say. States, burned by several years of shortfalls, kept their estimates of total revenues on the conservative side and are now reaping plenty.

"Unexpected" and "higher than expected"? Only if you've been living under a rock (or you've been too busy using government moles to leak classified national security information in violation of federal law).

State surpluses at their highest level since 2000? Something's happened since 2000 that promised to increase revenue to the government (and has indeed done so). Could it cuts? You know, that thing that increases revenue to state and local governments every time it's tried? Nah...couldn't be.

So while the functional economic illiterates at the Big Apple's fishwrap may find the extra revenue inflow "unexpected", those of us who pay attention know otherwise.

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