October 26, 2007
Nov. 2007 Ballot Measures - Wake UP America
Next month, there are 38 ballot initiatives in 6 states going before voters. Watch out! This year nearly all ballot initiatives have been approved with very, very low voter turnouts. If you value whether or not your children will be taxed heavily in their work lives, you may want to pay attention and vote against many of these.
In a review of ballot initiatives, the Initiative & Referendum Institute has issued (in pdf format), BallotWatch, which covers state ballot referendums and ballot initiatives. Nearly half of November's initiatives will be held in Texas. But, they are very important for voters in all the states in which they occur.
The vast majority of the initiatives are not petitions from voters and citizens, but, placed on the ballots by your politicians. Therefore, you can count on a number of these initiatives having been designed to benefit the politicians, not you the voter and citizen, or future voters and citizens. Chief among these are Bond issues, which give politicians the deceptive cover of government spending today for projects your children will end up paying for in the future.
Bond issues have appropriate uses, but, more and more, politicians are selling voters on spending projects to get votes, by way of state borrowing through bonds issues in off-year elections, when few voters will show up at the polls increasing the likelihood of passage. Bond issues defer payments by the state for that spending, as well as collecting the taxes for it well into the future, often decades into the future. Bond issues are little more than credit cards for politicians, but, it is the future working citizens who will make the payments for half or more of their lifetimes, and pay the interest on the borrowing from tax revenues which could have been spent for better education, better roads, or energy saving measures.
Let's look at how this psychological game between politicians and citizens works. In Texas, as in many states, there is a budget surplus. One would rationally think that if there is a surplus, there is no need for politicians to borrow, right? Wrong. That is not how this game works. Politicians want to brag in their campaign literature about the new roads, bridges, schools, community centers, playgrounds, and government employee benefits they secured for voters. But, some of these have huge price tags and even the smaller dollar items collectively create large price tags and interest payments that could have purchased more bang for the tax dollar.
So, the politicians, rather than ask current voters for a tax increase to pay for them, which would not make them as popular, if re-electable at all, pull out the FUTURE tax payer's charge card and put forth a bond issue proposal in an off year election, which few but politician friends, family, neighbors, and donors show up to vote for. The bond issue passes, and a note is made on the 6th page of local newspapers, and everyone is happy.
Well, everyone except perhaps your children or yourself if you are young and in the work force. If you ask your children if they want to pay more taxes than their parents do, they would likely say "No Thanks, Dad, or Mom". But, that is precisely what a bond issue does, raise taxes on future workers who will have to pay off the bonds, or at the very least, eliminate the possibility of a tax reduction for them.
OK, so in Texas for example, Proposition 2 proposes $500 million bond borrowing for higher educational loans to students. Sounds good. Your kids would likely even go for this one. But, why borrow this money, when the state already has a budget surplus to pay for it?
Well, politicians wouldn't be able to say in their re-election campaign in Nov. 2008 that the state has a budget surplus, obviously. Classic case of wanting their cake and to eat it too! They get to say they purchased this and that and the other for voters and still produced a budget surplus! It is a sham. And voters fall for it.
This borrowing option will COST tax payers more than if politicians paid for it up front. Bond issues come with an interest price tag, a cost to taxpayers they otherwise would not incur. So, this is a classic example of politicians raising the cost to taxpayers in order to get reelected. But, in a manner few, if any, voters would recognize. There are other bond initiatives in Texas that follow this same pattern like Proposition 4 for 1 billion dollars for state agency construction projects.
Texas paid out more than $825 Million dollars in interest payments in 2006. And their politicians see no limit to increasing this annual amount, despite the fact, that Texas is a Republican government state. The perception by the public is that bond issues only add a little to the cost of government because payments are made over time. But, what they don't realize is how quickly a number of bond initiatives begin to rack up the interest to be collected in taxes. They also don't realize that when voting for a bond issue, they are voting for their children paying it off, as if their children, as adults, won't have their own issues and expenses to deal with, in addition to retiring the old debts of their parents.
In all, Texas is proposing more than 9.75 billion dollars in Bond initiatives for next month's off year election. There are 5 separate bond issues to be on the ballot. Politicians have one other card up their sleeve. Ballot initiatives placed on the ballot by politicians are worded in such a way as to sell. Like cancer research, another one of Texas' ballot initiatives. Who would turn down Cancer Research, right? But, there is no one to give the other side of the story, like the fact that the money won't be spent on Heart Disease research, which kills many more Texans than cancer.
Texas and New Jersey seek Bond Issue borrowing while other ballot initiatives seek to cut taxes. That is how this game is played. They spend by borrowing and campaign on the improvements and projects they passed while claiming to have balanced the budget at the same time. Lower revenues, increase borrowing. It is a prescription for disaster for voter's children. This federal model of borrow and spend is catching on in the states too.
Then there is an odd-ball ballot initiative. Alabama, in June, passed one that read: "Legislative measure that requires health care funds dedicated to retired state workers to be used for their health care." DUH! Alabama has some serious communication problems between citizens and politicians
Louisiana's Katrina experience apparently has awakened voters there to pay more attention to off year ballot initiatives. Voters there defeated a proposal to exempt consigned jewelry from property taxation. Meaning jewelry up for sale would be taxed like jewelry not for sale. Jewelry sellers didn't get this exemption by the voters. Good for them. It pays to pay attention and vote in these off year elections, what you don't know can cost you and your children for decades.
Posted by David R. Remer at October 26, 2007 06:08 PMOK, so in Texas for example, Proposition 2 proposes $500 million bond borrowing for higher educational loans to students. Sounds good. Your kids would likely even go for this one. But, why borrow this money, when the state already has a budget surplus to pay for it?Thanks for the heads up on these items. We read the pros/cons of each proposition carefully. Posted by: d.a.n at October 26, 2007 08:20 PM
David,
I live in what may have been one of the last “dry counties” in the USA. While the election nearly two years ago that changed the law was not a true “ballot initiative” I believe it deserves mentioning.
The majority in this county preferred to keep us “dry”! But very few turned out to vote because there were no “major” issues on the ballot. Bottom line is: ALL elections count!
Now, there’s much regret and a lot of back-peddling trying to limit the location of liquor establishments and local liquor laws.
Every election counts!!!!!!!!!!!!
Posted by: KansasDem at October 26, 2007 09:24 PMKansasDem
How right you are. Every single election counts. And when folks don’t turnout to vote for or against a ballot measure they’re giving their approval of the results. Even if they don’t like the results.
Right here in my county a couple of years ago we had a proposition to make this county wet. Like in your county a lot of folks that were against it didn’t vote. The measure passed by 98% of the votes cast. If everyone opposed to the measure had voted against it, it would have failed by just about the same margin.
The folks in the states where there are ballot measures need to read very carefully every measure on the ballot and cast their votes for or against them. Once a measure is approved, even if most folks don’t like it, it’s not going to get reversed very easily.
Posted by: Ron Brown at October 27, 2007 12:12 AMDavid, here’s an interesting site about pork-barrel, corporate welfare, eminent domain abuse, and the Texas Trans-Corridor.
Money for My State? … see 6th paragraph …
That comes out to $132 billion in debt for local governments — more than $5,700 for every man, woman and child in Texas.
See propositions 2, 4, 12, 15, 16.
Proposition 2 would cose $500 million for student college loans, but taxpayers might end up bailing it out if it goes insolvent.
Proposition 4 would cost $1 billion for repair, maintenance, improvements, and construction. Despite $57 million in state funds obligated to pay for interest on the debt, Texas has a state budget surplus.
Proposition 12 would cost $5 Billion for highway improvement projects, but the Texas DOT has not drawn down $3 billion in bonds from a 2003 referendum. Should voters pay more?
Proposition 15 will cost $3 billion for cancer research. Sure, a cure for cancer is important, but more people die annually from heart disease. This sounds like some corporate welfare. And why not fund it from the state budget surpluses?
Proposition 16 is for $250 Million for bonds for the Water Development Board for to help distressed communities. And the board has estimated an additional need for $5.4 billion.
Seems like a disease. State tax payers should carefully scrutinize these bond issues, because a lot of it looks like pork-barrel and corporate welfare, and you have to wonder why when some states (e.g. Texas) have a budget surplus? It’s bad enough that the federal government is a black hole for tax dollars.
Posted by: d.a.n at October 27, 2007 11:27 AMdavid
here are some of the ballot initiatives we’ve had in our last two election cycles here in california. some good some bad. the one that really stunned me was prop 90 dealing with eminent domain. it failed in IMO because there was no money spent for ads supporting it. it would have limited the taking of private property only for actual public use, and would have forced gov’t to pay property owners loss in value for downzoning. of course this was fiercely attacked by cities, counties, the sierra club, and most environmental groups as it would have taken away some of thier lobbying power in the state.
http://www.igs.berkeley.edu/library/htSpecialElection2005.html
http://www.smartvoter.org/2006/11/07/ca/state/prop/
Kansas Dem, yep! First the absence from the voting booth, then comes the regret! When will Americans wake up? I hope d.a.n. is wrong, and that its not after it is too late to salvage our nation.
Greenspan reiterated in an interview this week that the next quarter century will not benefit as the last quarter century has. And what we do now, will make that inevitability many times worse, or only modestly so. But, there is a point of no return that has arrived. We seize it, turn this ship around, or continue this Titanic’s path toward the berg.
Posted by: David R. Remer at October 27, 2007 02:31 PMd.a.n, quite right. I will vote, but almost nothing I have ever voted for in Texas has ever passed. Perhaps this election in a week will be different. Without hope, there is no reason to act. Keep hope alive.
Posted by: David R. Remer at October 27, 2007 02:33 PMdbs, it is truly amazing how the special interests have such complete dominance over the will of the people, but, only because the people react instead of act. We founded democracy, but, we the majority of the people haven’t lived by it, or defended our rights to it, for a very long time now. A republic without active people power at the polls as counterbalance, is very much what China and the U.S. today now have in common.
Posted by: David R. Remer at October 27, 2007 02:38 PMOK, so in Texas for example, Proposition 2 proposes $500 million bond borrowing for higher educational loans to students. Sounds good. Your kids would likely even go for this one. But, why borrow this money, when the state already has a budget surplus to pay for it?So what is the surplus in Texas? Is their enough money to pay for this program without the bond? What is the net potential tax benefit if this bond is approved? Or is it, that all Bonds are bad?
Oh and Prop. 90 in California was incredibly flawed. Downzoning in California is not a problem, as municipalities are required to pay the landowner the present lands worth. One problem with Proposition 90 was that it required municipalities to pay the landowner the worth of the property after it was developed/redeveloped, not it’s current value. This would have stifled redevelopment and further stagnated rejuvenation efforts by municipalities. There is another Proposition proposed for our next election in California that purportedly makes more sense.
Cube, as I say in the article, passing the cost for present needs to future tax payers is NEVER sound fiscal policy for the future, IF either the present need is not dire or, tax revenues are available to pay for it without borrowing.
Borrowing carries interest costs which preclude purchasing other services and priority needs in the future. It assumes future tax payers won’t have pressing contemporaneous needs of their own to deal with. An incredibly flawed assumption.
As for Ca., I agree, it was flawed, and the new proposition hopefully will redress that flaw. Because eminent domain was never to be used to steal from citizen and profit another based on wealth or influence with power brokers.
Posted by: David R. Remer at October 28, 2007 08:49 AMThe nation is addicted to borrowing.
Whose making all the interest on those loans?
I agree with you Dave that voters should be careful when approving Bonds. Unfortunately you chose a very bad example to illustrate your point. Proposition 2 in Texas is just a reiteration of similar College Loan Propositions that Texas has approved in the past. These Bonds have up to now have never cost the taxpayers of Texas any money. The repayment of loans plus interest by the students has paid off the previous Bonds in the past. Thus the students benefit from having lower interests loans available to them than they could get from other sources. This enables more students to get a higher education. The State of Texas benefits by having a larger educated workforce than they would without these loans, and creates a greater tax base. The alternative to achieve what Proposition 2 accomplishes is to raise taxes to lessen the costs of higher education.
My basic point in all this is, there are times when a Bond is good. A State or municipality may not have adequate funds for an important project. While debt is not anything any State would want, like most homeowners who finance the costs of their first home, there are certain projects worth borrowing for.
Cube, guess you missed where I said the same thing about bond issues.
Posted by: David R. Remer at October 28, 2007 09:22 PMI voted early. There’s a lot of unnecessary spending, corporate-welfare, and pork-barrel in the 16 propositions on the Texas ballots (7 of which I voted against).
Here’s one I voted for:
- Proposition # 03: Amendment No. 03 (H.J.R. No. 40) Authorizing the legislature to limit the maximum appraised value of a residential homestead to the lesser of the homestead’s most recent market value as determined by the appraisal entity or 110 percent, or a greater percentage, of its appraised value for the preceding tax year.
Also, property taxes in many cases are REGRESSIVE, since (like all sales taxes are REGRESSIVE), as income decreases, the property tax increases (as a percentage of income). Also, property taxes are double, triple, quadruple, quintuple, … , N-tuple taxation because it is repeated every year! A home owner is taxed every year on what the home owner already owns. A $100K house can be taxed $2K every year. That is $10K after only 5 years. And to make matters worse, property taxes keep rising with inflation. In only 20 years, your property total property taxes could exceed the original price of the property. And rising rates are running some people out of their homes. It forces the elderly to downsize and sell homes they have lived in for many years to reduce their annual property tax.
We have enough REGRESSIVE taxes already, with dozens and dozens of REGRESSIVE sales taxes (city, state, county sales taxes, fuel taxes, telephone excise taxes and fees, etc.); all sales taxes are REGRESSIVE.
And in addition, income taxes are now REGRESSIVE too (due to a myriad of tax loop holes), which is why Warren Buffet (2nd wealthiest person in the U.S.) pays a lower tax rate than a secretary making $60K per year.
Posted by: d.a.n at November 5, 2007 08:04 AMTexas voters should be very suspicious of almost half of the propositions on this 16 proposition ballot. A lot of it is suspicious, and raises the question: Why does the state have to do this? If these bonds don’t work out, who gets the bill?
Consider Texas Governor, Rick Perry, who tried to force (via executive order) women (age 9 to 21) to take an HPV virus vaccination.
So, you have to wonder WHY an executive order by Governor Perry is required to force women to take a vaccine?
It’s not required. The only HPV vaccine at the time was from pharmaceutical Merck’s Gardasil (which received FDA approval in June 2006). One of Merck’s three lobbyists in Texas is Mike Toomey, Rick Perry’s former chief of staff (source: reported by Associated Press). Texas Governmor Rick Perry also received $6,000 from Merck’s political action committee during his re-election campaign.
Cha-ching!
The hypocrisy of our elected officials appear to have no bounds, as they work to devise more regressive systems (which did not all come about by mere accident), and new ways to bilk the public and the tax payers.
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