Legislative Schizophrenia
Remember SQ 779 in 2016? The teachers suffered a massive defeat despite outspending the anti SQ 799 forces by 7 to 8 times and the ballot measure still lost 59.4 to 40.6. Now the legislature in all its wisdom is trying to pass even higher taxes in order to fund a teacher raise that the voters rejected less than one year ago.
We are told that 11 am on Tuesday is scheduled for the first vote, the entire package of increased taxes, new taxes, and massive spending is said to be scheduled for Wednesday. We knew about the private discussions about the deal Sunday night and were told that House and Senate leadership was waiting till after the weekly newsletter was published to tell the rest of the House of Representatives. We chose to keep our powder dry and run a special edition.
If everything passes? Four months of increased revenue if the Emergency Clause vote fails, immediate tax increases if the Emergency Clause votes passes. McCall's leadership team believe they can count on 54 Republican votes and would need at least 22 Democrat votes to force a super-majority vote on a tax increase. Democrats are saying that the maximum number of cross over Democrat votes will be around 12 if Minority Leader Scott Inman's discipline fails. Some Democrat House members are saying there will be few if any cross over votes.
Bound to fail, designed to fail actually, and you need to know why, but first we will look at the package as told to the Republican Caucus on Sunday and Monday. Plan A looks like this:
- Cigarette Tax increase of $1.50 per pack, super-majority vote needed.
- Increase of the fuel tax by 35%, super-majority vote needed.
- Increase the excise tax on low point beer by 11%, super-majority vote needed
- The return of the refund-ability of the Un-Earned Income Tax Credit, 51% vote needed.
- 2018 teacher raise of $1000.00, 2019 teacher raise of $1000.00
- 2020 teacher raise of $1000.00, 51% vote needed.
- State worker raise of $1000.00, 51% vote needed.
Not factored in is the Social Security match of 7.5 %, the medicaid tax increase, and the additional retirement system increases due to the increased salary especially for those teachers and state workers that are nearing retirement and earn far more in retirement due to their benefit being figured on the final years of salary. Any salary increase also forces the state agency to immediately deposit 10% of the salary increase in the agency retirement fund so increasing the cost of salary increases by 50%, even 100% is not overly pessimistic.
The entire package if passed in entirety will generate $170,000,000.00 in 2018 budget funds and $400,000,000.00 in future budget years. The first year the state incurs an additional $80 million budget hole, the second year balances out if tax collection doesn't falter (a big if), the third year the state is back in the hole for $150 million dollars per year from now on.
If they are raising 170 million in 2018 budget funds and spending $400 million for teacher pay, state worker pay, and paying out the Un-Earned Income Tax Credit then the missing funds for 2018 will come from one time sources and the rainy day fund. That is right, they are holding a special session to increase spending far in excess of the new taxes and increased taxes passed.
