More questions about Prop 1

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Dr. Malcolm Cross
Dr. Malcolm Cross

Reading The Flash, I saw an article in which a candidate for city council said, “I firmly believe that through careful fiscal stewardship we can successfully reallocate existing financial assets to improve our roads, water lines, and other aspects of infrastructure.” 

In the comment section, somebody asked, “Which existing financial assets would be reallocated for improvement? City employees’ salaries, raises, health insurances, departmental budgets?”

The candidate’s statement and the question it elicits illustrate a major problem in public finance:  To reallocate money to anything requires one to reallocate money from something else.  In other words, to increase spending on Project A by reallocating money from Project B requires cuts to Project B.  Whether this is good or bad depends on the relative merits of Projects A and B, but one cannot rationally discuss increasing spending if one is unable or unwilling to say where the money’s coming from, and what else will be cut to free up the money.

The refusal of supporters of Prop 1 to acknowledge this basic fact of public budgeting and finance is only one of the reasons why I oppose, and have voted against, Prop 1:  They say that nothing need be cut to supply more money for their prospective economic development projects, and no taxes need be raised—all the money will be produced by surpluses. 

And that’s another reason why I’m against Prop 1:  If surpluses are produced, they should be returned to the people in the form of tax cuts.  After all, a major theme harped on by supporters of Prop 1 is that it somehow “gives Stephenville citizens the voice they deserve.”  But what better way is there to give citizens more say in the expenditure of their money by, well, giving them back their money, through tax cuts, and letting them spend THEIR money THEIR way?

My opposition to Prop 1 does not mean I’m against either economic development or at least some degree of government involvement.  True economic development will expand the tax base and generate more revenue with lower tax rates.  But government can best promote economic development through:

• Promoting law, order, and public safety, and public works, thereby making Stephenville a better place in which to live and work;

• Maintaining a reasonable tax rate, high enough to produce funds for necessary services, yet not so high that economic growth is discouraged;

• Keeping economic regulations few, and easy to understand;

• Maintaining an even playing field, with fairness to all, and favoritism to none.

This last point is why I opposed tax breaks to entice Lowes to come to Stephenville.  I had no objection to having Lowes open a store here.  Indeed, like most others, I thought it would be good for the local economy. 

But I opposed tax breaks to Lowes because it would then have an unfair advantage over its competitors in Stephenville.  In the competition among local businesses, the government must remain an impartial umpire or referee.  It cannot grant tax breaks to some and deny them to others.  That’s not fair.

And that’s another reason why I oppose Prop 1. 

Supporting Prop 1 and the creation of a government-financed Economic Development Corporation, the Chamber of Commerce tells how a Stephenville restaurant was able to open up branches in other communities with the help of their ECD’s.  Therefore, the prospective new Economic Development Corporation the Chamber of Commerce wants a new EDC to bring new businesses to Stephenville as well.

Now, I don’t have any objection to having either the Chamber of Commerce or STEDCO (the current Stephenville Economic Development Corporation) bringing new businesses to Stephenville.  They’re private organizations, consisting of private citizens, and they’re free to do what they want within the law.  In fact, I wonder what the new EDC can do which they haven’t already done.

But, I have every objection to the GOVERNMENT helping new businesses get started, unless the services it offers to new businesses are already being provided to existing businesses as well.  Otherwise, tax breaks and other services for new businesses would give them the unfair advantages over their existing competitors, which I oppose (I would also oppose withholding services to the new which existing businesses have, since that would give existing businesses unfair competitive advantages as well).

And I also object to the government, through its new EDC, giving aid to existing businesses as well, unless that aid is going to all businesses.  Either aid to all, or aid to none, are the best ways to maintain that level playing field.

I don’t have any illusions about the outcome of the upcoming election:  Prop 1 is almost certain to be adopted.  But contrary to what Prop 1’s supporters tell us, I believe it probable that Prop 1’s adoption and implementation will lead to either more service cuts and/or tax increases, and less fairness in the competition of businesses for our money.  I’m pleased and proud to announce I’ve voted against Prop 1, and I hope you’ll do the same, if you haven’t already voted.

Malcolm L. Cross has lived in Stephenville and taught politics and government at Tarleton since 1987.  His political and civic activities include service on the Stephenville City Council (2000-2014) and on the Erath County Republican Executive Committee (1990 to the present).  He was Mayor Pro Tem of Stephenville from 2008 to 2014.  He is a member of St. Luke’s Episcopal Church and the Stephenville Rotary Club, and does volunteer work for the Boy Scouts of America. Views expressed in this column are his and do not reflect those of The Flash as a whole.

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