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"Tell It To The TEL"

Norm Leahy, a taxpayers friend and regular blogger at Tertium Quids, has a column posted at Bacon’s Rebellion in which he responds to remarks by the chairman of the Virginia House of Delegates’ Appropriations Committee. Leahy writes:

“The red ink is rising around Virginia ’s budget. Politicians are scrambling for items to trim and pare, while others are clucking their tongues in self-satisfaction.

“They have no right to do so. Behind every budget crisis, including this one, there is a bipartisan gaggle of pols who gleefully voted to increase spending, even when prudence and common sense, dictated that a bit of restraint was in order.”

The solution to control Virginia spending is a tax expenditure law (TEL), according to Norm Leahy, who wrote:

“TELs generally work around a couple of principles: Spending increases are limited to some combination of inflation and population growth and any excess revenues are rebated to the taxpayers. These are tough laws, designed to keep politicians on a very short budgetary leash. Because they tend to take a lot of the fun out of being a legislator, politicians generally oppose them, as do the numerous interest groups and associations dedicated to milking the public purse.”

In his column, Norm provides a link to a June 2005 study published by the Virginia Institute for Public Policy (VIPP). Additionally, VIPP has two shorter papers, called Virginia Viewpoints:

  • In “Spending Reform, Not Tax Reform,” Virginia state Sen. Ken Cuccinelli (R) writes: “It is historically undeniable that, as a group, politicians cannot be trusted with taxpayers' money. Given the opportunity, they will spend it all, and then pawn whatever they can lay their hands on to spend even more.” He then goes on to advocate for a TEL.
  • In “Increase Spending, Raise Taxes? Been There, Done That.” economics professor Richard Vedder says “Virginians should be wary of so-called tax reform.” Specifically, he writes: “Literally dozens of studies show that there is an inverse relationship between the overall tax burden and economic growth - higher taxes, lower growth. This relationship holds for different areas, time periods, and ways of measuring growth.”

The process does indeed need fixing as we growled on March 10, 2008. As Virginia's Joint Legislative Audit and Review Commission (JLARC) noted in their 2007 update on state spending:

"Adjusting for the effects of inflation and population growth, the budget increased by 38 percent, and average  annual increase of 3.7 percent" over the past ten years.

Taxpayers should demand a tax expenditure limitation law from their legislators in the Virginia General Assembly.

UPDATE (8/25/08): By the way, if the politicos think it's important to spend in excess of the TEL, the voters have to approve any increase in a referendum. 

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