• 48°
franklin county times

The art and science of revenue forecasting: Teacher pay and tax cuts

By Staff
MARCH 11, 2001
I am among those who favor both tax cuts and teacher pay increases. Yes, I know about mixing state and national issues. Dubya Bush has cornered the tax cut cause within the Beltway. And in Jackson, Ronnie Musgrove is carrying the teacher pay flag.
There is, however, a common thread in both of these programs. Each hangs on revenue projections. That's correct, each is built around assumptions about the flow of tax dollars. And prediction of tax receipts requires making assumptions about the relative economic health of the state and nation. Talk about a game of chance.
Hindsight
Our hindsight tells us that Mississippi's economy as well as our national economy has cooled. And may get a bit cooler before rebounding. Slower overall job growth translates to less tax revenue than expected. No work, no taxes to pay.
Last spring the Mississippi Legislature approved a long needed multi-year teacher pay increase program strongly advocated by the governor. The program was funded for the initial year and future funding was conditioned by the growth of state tax funds. The idea was "if the money's available, the future increases will be funded."
Guess what? State revenue has not materialized as "projected." Teacher expectations have been raised, political positions taken, most state agencies have taken budget cuts within this year and will enjoy deeper cuts next year. A classic case of forward funding based on projections.
And on the national scene, the tax cut proposals presented by President Bush's team are crafted around ten year projections. Do you think Washington budget projectors and planners are more accurate than their Mississippi counterparts? Maybe so, probably not. The huge numbers seem to allow more wiggle room.
Ten-year predictions'
But it's not the big numbers that rattle my cage. It's the TEN year projection frame and those items included or conveniently omitted. Year by year estimates are not easy and three year projections are very difficult. And questions of what to put in and what to leave out are easy on the front end of a projecting process.
Ten year economic projections, while rooted in current information and knowledge, are predictions, not facts. Sort of like video taped historical fiction played on fast forward. Or maybe an artist's rendition of the future played on slow rewind. Ambiguous. Fuzzy.
How fuzzy? The budget proposals assume, that's right assume, Congress will hold growth in discretionary spending down to 4 percent next year. That's one-third less Congressional pork than the average of the last three years. Anyone want to bet Congressional restraint will hold discretionary growth to four percent? As Tip O'Neil knew, and as Emeril Lagasse says "pork fat rules."
Assumptions
Other assumptions include the concept of Congressional agreement about overall spending levels. Such agreements sound noble and good but have a very spotted history. Both parties have been guilty of agreeing to and then abandoning "spending caps."
Trying to juggle debt management, trust fund solvency, public spending and tax reduction over a ten year period is a mind boggling exercise in social and economic engineering. Common sense would suggest a year by year strategy to:
(1) pay down the debt
(2) assure social security solvency
(3) cut taxes
(4) control spending based on what's left.
And yet we do know government expenditures tend to rise to meet tax income. How about incremental cuts? Year by year reductions, adjusted annually depending on the condition of the economy and upon Congressional spending restraint seem to make sense.
But back in Mississippi, taxpayers are about to pick up a check for teacher pay increases. Paying this tab will require continuing spending discipline of all state agencies. Our cooling economy will result in lower tax revenue receipts. Are there lessons to be learned from the teacher pay deal that might apply to the national tax cut proposal?
Bill Scaggs is president emeritus at Meridian Community College and a senior consulting editor for The Meridian Star. E-mail him at wscaggs@themeridianstar.com.

Franklin County

Republican primary run-off election for county commission seats takes place April 16

News

Historic Roxy Theatre celebrates 75th Anniversary with upcoming entertainment

Franklin County

PROGRESS 2024: Veteran Spotlight – Mark Dunbar

Franklin County

Franklin County makes seven drug trafficking arrests

Galleries

Why Knot car show cruises into downtown Russellville

News

Get free weather radio at VFDs

Franklin County

PCHS FBLA hosts Little Miss Dream Girl Pageant

Franklin County

PROGRESS 2024: Veteran Spotlight – Johnnie Pounders

Features

Sam Warf: From Tennessee to the White House and beyond

Franklin County

PROGRESS 2024: Veteran Spotlight – Mousey Brown

News

Russellville First Baptist Church receives historical marker

Franklin County

PROGRESS 2024: Meeting a higher standard – Russellville High School JROTC

News

RCS BOE announces new superintendent  

News

Miss Dream Girl Pageant names winners

Franklin County

First Metro Bank hosts FAME Girls’ Ranch donation drive

News

PCHS holds annual Shelby Grissom Memorial Fashion Show

Franklin County

PROGRESS 2024: VFW Post 5184 – ‘No One Does More For Veterans’

Features

Supporting students’ futures

Features

Red Bay Garden Club discusses amaryllis planting

Franklin County

UA announces local students for fall 2023 President’s, Dean’s, graduation lists

News

School news

Franklin County

PROGRESS 2024: Veteran Spotlight – Troy Oliver

Franklin County

Appropriations bill passes, allots more than $3 million for new Russellville library/multipurpose center 

Franklin County

Franklin County Cattlemen’s Association names Cattleman of the Year 

x