Tax credits should be voted on, not automatic

Good politics is not always good policy. Legislative Referendum 123 is a good example of that.

Although parts of it remain in litigation, as of now a recent court ruling will allow LR123 to go before Montana voters in the general election next fall. If approved, it would result in an automatic tax credit to state taxpayers any time state government generates a revenue surplus 25 percent greater than was projected at the end of a legislative session.

Who would vote against that? Perhaps both liberals and conservatives would after giving it some thought. Nothing prevents the legislature from calling itself into special session now to enact a tax credit or for just about any other purpose. Why make this particular policy decision automatic?

Now if the legislative fiscal analyst determines that the budget has drifted out of balance, the governor calls the legislature into special session to enact a plan to get it back in the black. The people’s elected decision-makers must make hard choices, and they are accountable to the people at the next election for their actions. Not automatic, but democratic.

Under LR123, the fiscal analyst would estimate the amount of a surplus, and then that estimated calculation would be what automatically triggers a policy decision that traditionally only our elected representatives have made. Providing tax credits is as much a matter of public policy as a decision to spend, and just as philosophical.

As proposed in LR123, about 61 percent of the credits would go to the top 20 percent of Montana income earners. That seems greatly unfair to some, but to others it’s simply returning tax dollars to those who paid them. Should such a decision be made automatically?

In my 26 years of legislative service, I believe I participated in five unplanned special sessions to balance the budget. Swings in revenue are inevitable and can happen suddenly. But unlike in my legislative years, the state budget is more than 40 percent dependent on money from the federal government, of which 40 cents of every dollar is borrowed.

With the U.S. government is facing a $16 trillion debt, any unanticipated national or international development could cause the federal house of cards to quickly tumble, with enormous direct impact on Montana schools, health care, fire protection and prison system.

A better idea than automatic tax credits, especially in this uncertain time, would be to use unanticipated surplus money to create a restricted emergency fund. Montana is one of only a handful of states without such a “rainy day” or special disaster account.

I think I understand the reasoning of the legislators who voted for LR123. Public sector interests that benefit from government spending can place great pressure on legislators. Large surpluses intensify pressure to spend. (This might be true even if the money is in an emergency fund.) But, as the saying goes, “If you can’t stand the heat, get out of the kitchen.” Legislators can decide to say “no” as well as “yes.” That’s what we elect them to do, not to shield themselves from pressure.

In discussing this column with a friend, I was reminded of the 1980s comedy “Airplane.” In that movie, a fabricated lifelike, but brainless auto-pilot was programmed even to smile and wave from the cockpit. People could probably even have been induced to elect him to office. He sure couldn’t make a decision, however, in times of unpredictable mid-air crises.

Let’s not adopt government by a politically contrived autopilot. Decisions of public policy should be made thoughtfully, and only by those we elect to make them.

Bob Brown is a former Montana secretary of state and state Senate president.