Tuesday, January 22, 2008

Why did we raise taxes?

There is an old adage when it comes to government budgeting, "Use it or lose it." If your department is budgeted a certain amount of money, you don't want to have any left at the end of the year, because if you do, you are likely to have your budget cut in the next year.

I have seen cases where as the end of the year approaches, department heads are scrambling to spend on whatever they can; computers, office supplies, etc.

So, when every single department of state government finishes the year with a surplus, it makes you wonder. That is exactly what happened at the end of the '06-'07 budget year last September 30. Now that the books have been closed, we know that there was a $136 million surplus in the budget.

Now, maybe I'm too cynical. Maybe I should just assume that every department learned how to become more efficient. Well, maybe. But either way, I can't help but ask, why did we raise taxes and spending when every department had money left over from the previous year?


Anonymous said...

As someone who worked for a government entity in the past, I can confirm that this "Use it or lose it" mentality exists. I was in charge of a small tech. department and was approached by one of the budget guys who asked me "How much of this $600,000 can you spend in the next month?" Wanting to be helpful, I helped him spend all of it on new equipment that was wanted but not really NEEDED. If it were my business, I wouldn't have spent a dime of that money.

Now, this was the federal government (DOD), so I can't say for certain that this would be the same for state spending but you can imagine if my one little department in our one location had that kind of money...You fill in the rest.

michael emlong said...

I am glad Granholm raised taxes, because I know Government can do better then you and me. Government can solve all of our problems not you and me. I do not want to do anything for myself anyway

wolflady48884 said...

To anonymous: I have hauled office furniture to DOD at the end of the fiscal year. It was put in storage in huts and we were told it would just sit there because it wasn't needed but they had to spend money because there was a surplus at the end of the year. Same guy said it would probably be sold at pennies on the dollar later in the new fiscal year. Give you more warm fuzzies. Yes this is the way it works in government.

Gary said...

It's the same at the state level. Some years ago I worked at a state university in Michigan, and "spend the budget month" was like Christmas. Our Vice President was adamant that we spend every cent and try to justify more. It's part of the political process -- the bigger your budget, the better. Cutting costs was like stealing furniture out of the Department Director's office; he was under more pressure if he underspent ("overbudgeted") than if we ran short and he had to ask for emergency funds.

I can't tell you how much perfectly good equipment was discarded and replaced for no better reason than to top off the budgets, but when one of the state colleges has a "garage sale," you're guaranteed to find some real bargains -- at the expense of the taxpayers.