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I BALANCED THE BUDGET – Campaign Words Pt. 4

We are continuing our look at campaign words. This time we look at “I balanced the budget” as used in Arkansas by the legislature and Governor.

An incumbent legislator who includes this in a list of accomplishments may not have much in the way of accomplishments. It is just a filler with no real meaning. Even the most liberal tax and spend Democrat who served in the Arkansas legislature can say: “I balanced the budget every year.

First, when a politician talks about balancing the state budget the politician is only talking about the part of the state budget known as the “General Revenue Fund.” The General Revenue Fund only accounts for about 22% of state spending. (See a spending breakdown in the notes)[i]

Second, the General Revenue Fund is never overspent. It doesn’t matter whether the legislature increases state spending tenfold or by just a little. The fund is never overspent because many decades ago, back in 1973, the legislature adopted the “Revenue Stabilization Act.”  The Act set up a system to monitor, general revenue spending so that state agencies can’t obligate more spending than comes into the fund. The Act puts spending into categories. The lower categories get little or no money if revenue collections fall. In bad times spending even in the highest categories is cut under the Act.

Third, even with a “balanced budget” state expenditures keep increasing year after year. The budget process used by the state is not about how much money an agency needs. The budget process starts off with what the agency was budgeted the previous year and the legislature decides how much of an increase all agencies should get and whether certain agencies should receive even more to address certain issues.  Doing business this way guarantees that expenditures will go up as long as there is money in the treasury.

Don’t be fooled. If you are not familiar with what balancing the state budget means, the claim might fool you into thinking the candidate is a fiscal conservative even if the incumbent is a big government politician who spent most of his time trying to grow government.

What is important is whether the politician has increased state revenue collections and state spending. Sure, politicians always cut some taxes, but during the politician’s service has the politician raised other taxes. What legislation did the politician pass that obligates state spending and did the politician cut any state programs?

Be aware that the claim “I balanced the state budget” is not meaningful in determining whether the candidate is a tax and spend politician or a fiscal conservative.

 


NOTES

[i] This is the breakdown of Arkansas revenue based on FY 2019 data from the Bureau of Legislative Research:
Trust & other Funds – 30% ($7.7 billion)
Federal Funds – 30% ($7.8 billion)
General Revenues – 22% ($5.5 billion)
Special Revenues – 5% ($1.2 billion)
Cash Funds –12% ($3.1 billion)
State Central Services & Constitutional Officers Fund –1% ($0.3 billion)

 

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