Posted by
John R. LaPlante on Tuesday, September 05, 2006 9:47:32 AM
Budget hawks put a lot of emphasis on the federal government, though state governments get some attention. Local governments, by contrast, don’t get so much scrutiny, and that’s too bad.
The South Carolina Policy Council reminds us that local government spending can lead to an impending fiscal crisis.
For the last three decades, says Neil Mellen, state and local spending in South Carolina (and perhaps in your state as well) has increased faster than government revenue, or, more importantly, personal income.
The recent history of South Carolina should make us all wary of tax swaps, especially those that introduce new means of taxation.
“Three times state lawmakers have responded with swaps and reforms to the tax system. Despite the relief, the counties, cities and school districts have engaged in a perpetual increase of fees and property tax millage in addition to the adoption of local option sales taxes. The swap of funds has actually driven up revenues and expenditures at all levels of government.”
While advocates of tax swaps argue that they constraint growth by putting responsibility in the hands of government closest to the people, the council finds that the opposite occurs. With more funding projects passing through the state capital, local governments have less incentive to economize, and more incentive to overstate their needs.