Tuesday, January 08, 2008

I'm leery of so-called dedicated funds

Betsy Russell reports that House Speaker Lawerence Denney learned from talking to Idahoans that they are willing to pay for better roads through increased taxes "as long as we know it’s going to pavement."

I agree with that, but I'm leery of it. The concept is that the additional taxes get earmarked for, or dedicated to, building roads and bridges. A similar concept applies to money from the state lottery going to the state school system. The problem is that nothing prevents lawmakers from reducing what they might otherwise allocate, and thus offset the earmarks. The first year or two would probably see the full amount going to the targeted problem. Over time I suspect the legislature will reduce the former general fund contributions, effectively eating into the earmarks.

If the JFAC folks don't get to see how much in dedicated funds are going to roads, or schools from the lottery, then the dedication might work. But of course JFAC will look at those funds; it's probably irresponsible not to, because they could end up over funding something if they didn't.

So the earmark just ends up being political cover for raising taxes. I don't have a problem with paying for infrastructure, or for important functions of government, but we ought to be honest about it.


ericn1300 said...

I agree that that's the way it's often done in Idaho with dedicated funds or taxes. Other states have worked around that problem by having Lottery funds go only to educational needs and programs not already in the budget such as preschool, kindergarten and college scholarships requiring the legislature to keep funding normal education needs out of the general fund.

A similar solution could be used for dedicated highway funds, use them for new projects only and make the legislature come up with maintenance and repair funds above what the remaining fuel taxes provide. Even with dedicating the fuel taxes to pavement there will still be a lot of unmet needs.

Alan said...

Good idea about using the dedicated funds for special projects. That would help keeping them dedicated.