Don’t Approve HMR Tax Change

May 4, 2010

The City of Fayetteville, like many local governments, is facing a budget squeeze as revenues have declined without a commensurate reduction in expenditures.  In those instances, responsible public officials should explain to voters that either certain services will need to be cut or taxes raised.

We don’t have that kind of public official in Fayetteville.  Instead, our local officials seem to fancy themselves as slick politicians in the minor leagues, honing their skills at the art of public manipulation so that someday they may get called up to the big leagues of deception and lording over other people.

To offset the shortfall in the city budget, Mayor Lionel Jordan and his backers have proposed grabbing money from the hotel, motel, and restaurant (HMR) tax that is currently dedicated for park development so that they can use it to cover park maintenance and then redirect the general operating funds currently devoted to park maintenance to other parts of the city budget.

Jordan and friends are saying they want voters to approve changes in the HMR tax so that the revenue can be used for things other than the development of parks, giving the city more “flexibility.”  This is just doublespeak.  The flexibility they want is the flexibility to reduce park development spending so that they can keep other city operations unchanged.

Personally, I prefer the development of more parks and the cutting of other city services.  Our parks and public bike trails are some of the best things about Fayetteville.  But I could be persuaded that we needed to defer additional park development to avoid cuts in other services if they presented the trade-offs directly and honestly.  Make the case that additional park development is less important than other city services that would be continued.

But no.  Our local public officials refuse to treat us like grown-ups and have to use deception rather than presenting us with difficult choices straightforwardly.  This is the same kind of doublespeak nonsense we saw with the business license proposal. That wasn’t really about “helping promote local business.”  That was about facilitating the taxation and regulation of businesses while helping the Chamber of Commerce effectively compel membership.

And don’t buy the fall-back argument on the HMR tax change that says we are in danger of developing so many parks that the cost of maintaining all of them would be prohibitive.  If this were true, advocates for changing the HMR tax would need to present facts about rising park maintenance costs.  They haven’t.  Park maintenance costs have not been growing at a significantly faster rate than the city budget.  In addition, park maintenance only costs $1.9 million out of a total city budget that exceeds $120 million.  The HMR tax dedicated to park development generates about $2.3 million per year.

And also don’t buy the argument that we are just correcting a “mistake” from when the HMR tax was initially adopted.  It may well be that city officials meant to include maintenance and development as potential uses of the tax, but that’s not what was on the ballot and what voters ultimately approved.  We can’t know whether voters would have approved the measure if it had permitted the funds to be used for park maintenance as well as development.  And voters are under no compulsion now to allow the money to be redirected for other purposes.  If city officials want to convince voters to approve the measure, they need to make the case that those new bike trails we are developing are less important than other uses for the same money.

The Humpty Dumpty Arkansas Courts

December 7, 2008

Courts claim to be in the business of interpreting the meaning of laws.  But the oddly limited or expansive meanings that are selectively applied to the words in those laws suggest that they are engaged in a completely different enterprise — namely, politics.  The idea that courts are just another political institution has long been held by political scientists, including myself.  We tend not to be hypnotized by the black robes, marble columns,  and Latin jargon into buying the notion that judges are some sort of special priesthood, immune from and indifferent to politics.  

Judges are just regular pols without the typical reelection pressures but also without the typical resources to advance their agenda.  Legislators have the power of the purse while executives have the power of the sword, but judges just have the power of their word.   The limitation on the power of judges is not the constraint of reelection, but the constraint of having to convince the other branches and the public to do what they say.  Cultivating the image of a disinterested priesthood enhances the power of judges to get others to do what they say.  But if the judges demand too much, they undermine their priestly image and erode their future power. 

Judges have been in a particularly strong position to get others to do what they say for the last five decades.  Early in the civil rights struggle our democratic institutions failed us, protecting obviously unjust and illiberal practices.  After initially siding with these illiberal forces (see Dred Scott or Plessy), the Courts detected a shift in elite opinion and joined forces with those elites to consolidate a new, progressive coalition.    The Courts could rightly take credit for having helped rescue us from the failure of our democratic institutions. 

Because they were instrumental in civil rights,  judges accumulated a considerable amount of political capital and popular goodwill.  And they’ve been spending that political capital ever since.   The civil rights era gave the Courts the role as guardians of our liberal virtue.  So, it’s hard to suggest that the Courts have overstepped their bounds, usurped the power of other branches, or arbitrarily interpreted the law without being accused of opposing the liberal virtue that Courts are supposed to protect.  Past critics of over-reach by Court included segregationists, so if you criticize judicial over-reach today on some other topic you must also be a segregationist.

This is especially true in Arkansas, where the memories of desegregation battles at Little Rock’s Central High School are particularly painful.  You cannot criticize Arkansas Courts for over-stepping their bounds or abusing their authority without being accused of being Orval Faubus — and there is no worse political insult in Arkansas.  The problem with immunity from legitimate criticism is that Arkansas Courts are especially unaccountable for judicial over-reach or arbitrariness. 

The most salient recent example of this is the action of the state Supreme Court in the Lake View school funding case.  The state constitution does  say that the state must “maintain a general, suitable and efficient system of free public schools.”  But who knew that general, suitable, and efficient meant that there was a specific dollar amount that had to be spent on every student in Arkansas?  And who knew that that amount had to increase by at least the rate of inflation every year?  I doubt that the authors of the Arkansas Constitution knew that general, suitable, and efficient meant all of these things, but the members of the Arkansas Supreme Court sure did.  And they figured out how much the legislature needed to spend per pupil and for school infrastructure by appointing Special Masters, who convened public meetings, received testimony from interested parties, and wrote a report summarizing their recommendations. 

Of course, there already exists a body for holding public meetings, receiving testimony from interested parties, and deciding upon the appropriate levels of public spending — it’s called the legislature.  With the appointment of Special Masters the Arkansas Supreme Court clearly usurped the legislature’s power.  And the Special Masters showed no restraint in determining spending priorities for the state — a power reserved by the Constitution for the legislature.  They declared: “[School districts] should have the means to meet the challenge if the State remains committed to the all-important practice of funding education first.”  Where in the state Constitution does it say that education has the first priority on resources? 

Some have argued that the responsibility to fund education first is implied by having education as the only policy area specifically mentioned in the Constitution.  I’m sorry to say that these people have never read the Arkansas Constitution.  It also specifically mentions a number of other policy areas, including the need for an agriculture, mining, and manufacturing policy.  Specifically, it says that the legislature must pass laws to “foster and aid the agricultural, mining and manufacturing interests of the State.”  If the Court and its Special Masters see the words general, suitable, and efficient as meaning that education must be supported as the first priority and at a specific, ever-increasing amount of spending, why haven’t they interpreted “foster and aid” to mean that the legislature must provide specific subsidies to agriculture, mining, and manufacturing?

Clearly we have a Humpty Dumpty Court.  The words mean what they want them to mean.  General, suitable, and efficient have expansive meanings if it suits their purposes while foster and aid mean essentially nothing.  Only judges, as the special class of high priests, possess the magical glasses that allow them to read between the lines of the Constitution to see that one phrase implies the moon while the other implies bupkis.

And now the Arkansas Supreme Court is at it again.  They are currently hearing arguments on whether a state law exempting state contracts in excess of $5 million from competitive bidding violates the state Constitition.  A plain reading of the text would suggest that it does.  The Constitution states: “All contracts for erecting or repairing public buildings or bridges in any county, or for materials therefor shall be given to the lowest responsible bidder, under such regulations as may be provided by law.” 

But Circuit Judge Jay Moody ruled that the state law did not violate the Constitution because he interpreted the provision as only applying to contracts from county governments — not contracts made by the state government and its agencies.  I’d like you to re-read the constitutional provision and ask yourself whether this is the most reasonable interpretation of the language.  Doesn’t the phrase “in any county” seem to describe the location of public buildings and bridges, emphasizing that the bidding requirement applies in all parts of the state, not the government agency engaging in the contracting?

We don’t know how the state Supreme Court will rule on the matter, but figuring that out requires a political, not a linguistic analysis.  They can and will interpret it in any way the see fit to advance their interests.  The words can mean just about anything they want them to mean.  “The question is which is to be master — that’s all.”

UPDATE:  The Arkansas Supreme Court interpreted the cluase as applying only to county contracts and upheld the state law.  The decision can be found here.

The Arkansas Lottery Lock Box

September 23, 2008

Arkansas’ Lt. Governor, Bill Halter, has staked his political fortunes on a constitutional amendment creating a state lottery.  Halter has urged adoption of the lottery to increase funds for college scholarships and K-12 teacher bonuses.  All of the money, he emphasizes, will be used to increase education spending: “The bill specified that revenue generated by the lottery would expand, not replace, existing education funding.”

Promising that lottery dollars will be earmarked for increasing education spending is a common strategy to expand political support.  But of course it is impossible to guarantee that lottery proceeds would supplement and not substitute for spending.  Dollars are fungible, so it is always possible that lottery dollars would replace dollars from other sources that would have been used to fund increases.  That is, as long as education spending goes up (as it consistently has in the past), who’s to say whether those increases would not have occurred anyway without the lottery?  The lottery money could just free what would have been spent on education to be spent on something else.  That is, lotteries are basically just general tax increases even if it is claimed that the revenue is targeted for a particular purpose.  (See for example Spindler, 2003)

So, if lotteries are just another tax increase and not a free way to increase education spending, are they a good way to increase taxes?  Well, the tax burden from lotteries falls disproportionately on the poor and disadvantaged.  Supporters of progressive taxation shouldn’t be very interested in lotteries. 

On the other hand, some people enjoy gambling and want lotteries.  Liberty concerns would probably favor permitting gambling.  But a state operated lottery is effectively a local gambling monopoly, which lovers of liberty should dislike.  I guess the question is whether a monopoly is better than a prohibition as far as liberty goes.

However you slice it, the lottery isn’t a great deal.  There is no lock box into which the lottery dollars go to ensure that they increase education spending and cannot substitute for other dollars.  Lotteries are a regressive tax.  And lotteries barely increase liberty because they are operated as local monopolies.  Bill Halter may want to find a new issue to make his political fortune.