Fiscal conservatism doesn’t always mean tax cuts


Alabama State of the State Address
Gov. Kay Ivey gives the State of the State Address to a joint session of the Alabama Legislature on Tuesday, Feb. 4, 2020, in the old house chamber of the Alabama State Capitol in Montgomery, Ala. (AP Photo/Vasha Hunt) Vasha Hunt/AP

Fiscal conservatism doesn’t always mean tax cuts

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Credit one veteran conservative Republican legislator for understanding what real fiscal responsibility means.

Chris Pringle, just elected speaker pro tem of the Alabama House of Representatives, offered a word of warning to fellow lawmakers besotted with large but temporary state government surpluses. Rather than rush into tax cuts or find excuses to spend money, Pringle says the state should bank the windfall. With numerous state legislatures across the country also celebrating surpluses, his words of warning should apply all over the country, not just in Alabama.


Pringle noted that in Alabama (as is also true elsewhere), a major part of the unusual surpluses is money coming through the national American Rescue Plan Act of 2021, which was a pandemic-relief measure.

“It’s all going away and it’s going to end; there’s no more ARPA money coming down,” he said on Mobile’s FM Talk 106.5. “This economy is going to crash. You can bank on it. And when it does, our revenue is going to plummet. We could go back to what we were faced with in 2012 when we had no money.”

Pringle also noted that President Joe Biden’s inflationary policies mean that items already in the state budget will end up costing more than projected.

“All of our expenses have gone up,” Pringle said. “The cost of concrete’s going up; the cost of steel is going up; so we start building roads and bridges and all that’s expensive. … All of our costs are going up because of the inflation.”

Yet all across the country, Democratic state legislators especially are eager to spend the largesse, while Republican-dominated legislatures already have embarked on rounds of tax cuts while talking big about more tax cuts to come. This is not smart. Even without huge inflation such as the United States is now experiencing, one-time revenues dry up. Republican legislators may think they will get credit for passing tax cuts or rebates, but if their states suddenly start experiencing budget squeezes again, a far more ordinary circumstance than surpluses, they will get the blame when they find themselves forced suddenly to cut back spending on basic state services. Unlike the federal government, most state governments are required to balance their budgets, so they can’t just pretend the deficits aren’t there.

At the same time so many states have current-account surpluses, most states still suffer from serious unfunded liabilities in their pension systems. Rather than use one-time revenue for permanent tax cuts or lastingly higher spending baselines, a real conservative would use some of that revenue to pay down those pensions while they can.

If the Biden economy continues to perform badly, the last thing the country needs is a host of state governments suddenly facing budget crises of their own. Yes, tax cuts tend to be good conservative policies, all other things being equal. Sometimes, though, tax cuts should bow to the more lasting conservative virtue of prudence.


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