SDR raises a good point. It appears that $11 billion of the closing of the $42 B. budget gap is simply from more borrowing. This is just kicking the can into the future. When the bill comes due we will just have to raise taxes and/or cut services. We have already done this to such an extent that interest payments are now a big part of our “spending”. The credit markets, no fools they, have awarded our state with the worst credit rating in the country. We used to be tied with Louisiana, but now we’ve sunk below them.
In addition, history shows that tax hikes NEVER bring in their projected revenue, because the tax hikers use static analysis instead of dynamic analysis. They figure people never change behavior in response to incentives. Thus, a 10% hike in a tax will result in a 10% increase in revenues. In the real world, people can move, substitute leisure for work, buy their cigarettes in another state, have one spouse stay home, buy on the internet, etc., etc.
Those most likely to change their behavior are also the highest taxed, economically savvy, and productive citizens. Exactly the ones who do the hiring, the big spending, the risk-takers and creaters. Some on this site, like Turtle, are bolting or altering their spending.
Accordingly, the idea that the just-passed budget is balanced is a fantasy. In several months we will discover that revenues are falling well short of projections, the state needs more revenue, and all we need to do is raise taxes to close the unexpected gap.
It is a vicious cycle and our politicians and media, and some on this site are in denial.
