2006
Week 9
March 3, 2006

Hi

Frustrated folk will sometimes say "That is comparing apples to oranges." How about comparing apples to oranges to corn to license plates to paintings to 2X4's to calves to mental health to meth to wealthy investors??

Those are a few of the things we (in Appropriations) compare in creating or amending a state budget. I have been struck with the goofiness of this the past several weeks, as our committee makes the basic decisions which form a budget. One minute we considered the request from the Dept. of Education to continue two Native American staff who have done a remarkable job of helping grade and high school Indian students get away from alcohol, drugs, and cycling back into a life with no job prospects, and move toward college/training that would lead to jobs. Clearly, the staff reduces future tax load. The request was for $150,000. We had a motion to go for half of that, to keep one. Failed. We simply feel we cannot afford to pick up expiring grants.

The next minute, we reviewed a proposal to increase the use of folic acid in pregnant women who are prone to use alcohol, to reduce Fetal Alcohol Syndrome defect in new births. Changing one such birth would save the state $600,000 over the next 50 years, as that baby/child/adult would be our load for life. Change 100 such cases and produce a saving of $60,000,000. Request was for $500,000. We reduced it to 20% of request because we do not have the money.

The next minute we voted to accept a change in school aid formula, which gives us back $15 million. Now how does all of that fit?

"Frustration" is the word with which I started. You have to get past it. That is why they pay us the big bucks. Do it. We have taken several hundred such votes in the last six weeks.

However, people outside of the process wonder how we do it and keep our sanity. Fair question, to which I will give a greatly oversimplified answer.

We go with categories and principles and apply them to each item, one at time. The Appropriations process begins with nine votes, sitting at one table. "Five Hands?" is the regular question, testing the evaluation of those nine judges. We ask for a great amount of data, our analyst's evaluation and the reasons of the agency proposing the expenditure. That will stretch over days, or take two minutes.

Category #1: items that are required. You pay the light bill. The subset, which we ask often, is how can we change next year's light bill? This category, by the way, covers over 80% of our budget. The governor's salary is set by law. We have committed to aid for local schools, by formula, and subsidies to cities and counties, to hold down property taxes. Federal authorities require us to care for fetal alcohol babies. The public has made it clear we shall not put elderly low income persons out on the street. Required items.

Category #2: those expenses which will help agencies run better. Upgrade to proper software for computers. Provide insulation to bring down a heat bill and hold back a tuition increase. Change staff to fit the task.

Category #3: investment, such as I illustrated above. What current expenses will pay off in the long haul, reducing future state budgets in category #1? The best current example is in corrections. We will commit to $8 million in the next year, to deal with nonviolent offenders who are mentally ill and/or drug addicts. We must either develop alternative ways to deal with these (over 400) new offenders or build a new prison, which costs $80 million to build and $30 million a year to operate. So $8 m. per year sounds like a bargain. But it is still new money.

We are a grumpy lot. Best not to ask us to fund a federal grant that is running out, even if it is for Motherhood. Or to ask for a ‘deficit’ funding to fill a hole we did not agree to.

Side note. I have said it before, but this is a big deal. We do not have room to treat serious mental illness and cannot find enough professionals to do it right. Since drugs are usually involved, we confine the offenders in prison -- the worst possible place for mental rehab. If someone wants to get serious about taxes, start there.

After the give and take, we were successful in holding the bottom line about even for this coming year. The really good news is that the our $59 m. in reserves four years ago could grow to well over $400 m. by the end of next year, by our proposed expenditures. The really bad news is that campaigners want to dig into those reserves for a tax cut. Not wise, as we are still under our $500 m. target for reserves, which is enough to fund our operation for two months. But campaign season is silly season and wisdom does not attract voters. If we had had that 500 when the financial crisis hit 3 years ago we would not have had a crisis. With only 3 weeks reserve we soon were at a 2 day reserve. Quiet thy thunder, preacher -- thy flock hath ventured out the door to spend their extra $2 a week tax cut.

The sadder news: we have only 23 days left, which means we will not have time to further fine tune the budget and operations. Followed by 21 new senators next year, who are likely to think that $400 m. is a surplus, not the reserve.

A final bright note: we are arranging so that the interest from the reserve will finish the renovation of the capitol masonry and roof work, which will total over $30 million.

My web site was preempted for two weeks by a phony page with a copied name. Back again. It carries past newsletters, a sketch of some bills: www.lowenkruse.com.

I promise lighter fare for next week.

Lowen