Fiscal Phantoms

Which Montana Fiscal Phantom Scares You Most?

  1. $470 million budget shortfall predicted for the next biennium.
  2. $2.2 billion in unfunded pension liabilities, combined teacher’s and public employees’ systems.
  3. $1 billion worst-case scenario for firefighting the two million acres of beetle-killed forest, which is above-and-beyond the normal forest fuel loads.
  4. Continuing growth of state spending at the rate of the past six years: 41%.

Though #3 sounds bad, it is probably the least troubling. If all the dry forests burned in 2010 or 2011 and we insisted on fighting them in the standard way, (spending $50,000 of taxpayer money to protect an individual’s $10,000 cabin, and protecting forests that have no economic value because logging is prohibited), at least that problem would disappear for a few decades. Cost “one time” to taxpayers: [1]$4,000 per family.

If #1 was resolved through tax hikes, nothing would have been done to tame the appetite for spending and growth in spending. The escalation would continue. Fiscal problems would be exacerbated. A tax hike of just under $2,000 per family would temporarily resolve this problem.

If #2 is resolved with a $8,800 per family bailout, and the problem of overly optimistic investment yields and promises to pensioners is not addressed, this problem grows again. It would be like cutting out most of a cancer. Eventually it returns. In Washington this is called kicking the can down the road, putting off really solving the problem. (Even C is basically a deferral, kicking the can. Forests grow again.)

D portends logarithmic growth.

All of the problems, if resolved by taxpayer bailouts, are only temporarily resolved.

[1] Take the cost figure, divided by approximately 1 million Montanans, divided into hypothetical families of four individuals.


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