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by Free Market Duck

Idaho stockpiles $500 million to $1 billion tax surplus on top of last year’s $224 million surplus?
(Aug 23, 2008)

 “The total amount available is hard to figure, since no one is responsible for keeping track of all the pockets where the funds are kept.  But reasonable estimates range from $500 million to twice that amount – somewhere between 17% and 35% of the state general fund.” – Tom Ryder, Idaho Statesman editorial board community rep in 2006 and 2007

 Boise, ID – Whoa, girl friends, are you sitting down?  Good.  Pour yourself another hot cup of Rocket Java and listen to how the Idaho tax man has illegally over-taxed and stashed away over a billion dollars of surplus tax money, i.e., YOUR TAX MONEY during the last several years or so.

   First, let’s define a few terms and then remind ourselves about a few important Sections in the Idaho Constitution regarding budgets and expenditures, OK?

   In Idaho, there is no such legal (Constitutional) definition of surplus tax money or an allowable Rainy Day Fund.  These two nicey-nicey terms for what amounts to illegal slush funds were simply made up by politicians over the years to justify obtaining (oftentimes through purposeful over-taxation) and squirreling away extra tax money to spend in future years for real or imagined “necessities.”  But this is expressly prohibited by the Idaho Constitution in “Article VI, Section 11. EXPENDITURES NOT TO EXCEED APPROPRIATION.  No appropriation shall be made, nor any expenditure authorized by the legislature, whereby the expenditure of the state during any fiscal year shall exceed the total tax then provided for by law, and applicable to such appropriation or expenditure, unless the legislature making such appropriation shall provide for levying a sufficient tax, not exceeding the rates allowed in section nine of this article, to pay such appropriation or expenditure within such fiscal year.  This provision shall not apply to appropriations or expenditures to suppress insurrection, defend the state, or assist in defending the United States in time of war.”

   While the major point of Article VI prohibits deficit financing, the other explicit point is that the state cannot appropriate or expend extra tax money than the amount budgeted -- budgeted, not collected -- for expenditure within the current fiscal year.  The Idaho Constitution explicitly excludes creating or retaining slush funds, surplus tax money, or Rainy Day Funds.  Period.  It doesn’t matter whether the Governor thinks there might be a recession next year, or the state Legies think the economy might fall apart in two years, or somebody’s grandmother might want a new rocking chair in the next fiscal year, the creation or retention of Rainy Day Funds and billion dollar tax surpluses are illegal in Idaho.

   Indebtedness for future expenditures in Idaho are only allowed with special limitations in Article VIII, Section 3 of the Idaho Constitution.  Indebtedness to sell bonds for future expenditures must be approved by a 2/3 majority of the voters.  Period.

   THEREFORE, back to the scene of the crime, the action expressed in a guest editorial by Mr. Tom Ryder entitled, “Let’s use state surplus on a needed expense” is not constitutionally allowed.

   While Mr. Ryder correctly states that the surplus $500 million to $1 billion tax money belongs to the people and not to the politicians, he jumps all over the place in stating how it could be used, including giving it back, but then concludes with “now is the time to harvest our bounty,” presumably meaning we should – or legally could – spend it on something, anything as long as it doesn't just sit around earning interest.

   First, Mr. Ryder correctly points out that:  (1) $500 million to $1 billion is a lot of money, it belongs to the taxpayers, and it does not belong to the Legislature or the Governor and (2) although it is temporarily being watched – really, “being watched?” – by the state treasurer which Mr. Ryder admits in a previous paragraph in the same article, “the total amount is hard to figure, since no one is responsible for keeping track of all the pockets where the funds are kept.”  So, is it being watched or is it not being watched?  And what are these “pockets” – hidden accounts, or what – where the funds are kept?  Apparently Mr. Ryder and others know about these “pockets” else he couldn’t have referred to them in his editorial.

   Then, without missing a beat, Mr. Ryder casually continues, “How much should the state retain for that ‘rainy day’ or for emergencies?”  He answers himself with, “…most recommend [who is this ‘most’ person?] that a state maintain a cash reserve between 5% and 10% of the state’s annual expenses… [blah, blah, blah… .]“ 

   But wait, girl friends.  We just showed above that the Idaho Constitution prohibits “maintaining cash reserves,” or slush funds, or tax surpluses, or Rainy Day Funds and there is no definition stating that “most” experts -- or anybody else -- can supersede the provisions of the Idaho Constitution that prohibit the creation and expenditure of “surplus” tax money “on a needed” or any other basis.

   Undaunted, Mr. Ryder immediately jumps to the erroneous conclusion – after correctly citing the problem and then glossing over it for a collectivist “need” – that “some of the cash reserves [of the $500 million to $1 billion surplus] should be used this year to pay for normal annual operating expenses.”  Buzz, wrong.  Not constitutional according to Article VI, Section 11 EXPENDITURES NOT TO EXCEED APPROPRIATION within current fiscal year.

   Expounding on this false premise, Mr. Ryder then claims, “Idaho has borrowed by holding excess reserves of at least $200 million from its taxpayers, and we should begin rationally discussing how that excess should be used.”  Buzz, wrong, again.  Surplus tax money cannot be defined as a constitutional “borrowing” of money because the only allowable method to enter into debt is via the provisions of Article VIII, Section 3 of the Idaho Constitution in which indebtedness for future expenditures (such as selling bonds) must be approved by a 2/3 majority of the voters.  Period.

   Therefore, Idaho’s billion dollar tax surplus cannot legally be expended for new roads, “needed” secondary schools, new prisons, a medical school, parks, subsidizing alternative energy projects, retraining those who lost their job, a new rocking chair for my grandmother, or a myriad of other collectivist undertakings because this slush fund is a violation of at least two major Articles and Sections of the Idaho Constitution.

   There is only one thing that can legally be done with Idaho’s billion dollar surplus and, finally, Mr. Ryder suggests, “there is always the option [no, Tom, it’s not an option, it’s the law] of returning some or all [it’s ALL, Tom, not SOME] of it to the taxpayers and letting them decide how their money should be used.”  Hallelujah, Mr. Ryder guesses correctly, but…

   Just when you think Mr. Ryder finally stumbles upon the correct constitutional answer for returning Idaho’s billion dollar slush fund back to the taxpayers, he concludes his editorial with, “Let’s not leave it on deposit with a bank in the state treasury.  Let’s use it for something we need [sorry, Tom, not legal] either collectively or individually.  They [the state legislature] should get credit for saving for a rainy day, but now it is time to admit that they saved too much and now is the time to harvest our bounty.”  Buzz, wrong, again, Tom.

   The state legislature should get a “Go Directly To Jail” card, “Do Not Collect $200.”  They violated their oath to uphold the Idaho Constitution by creating surplus tax funds and not giving it back to the taxpayers.  This is called robbery, not saving.  The state of Idaho is not a private corporation.  It is a government whose only function is to protect individual rights, not participate as a player in the market.  Idaho politicians have no legal right to “harvest” their billion dollar tax booty under the guise of a Rainy Day Fund, a slush fund hidden in state accounting “pockets,” or anywhere else.

   The correct legal solution to Idaho’s current billion dollar tax surplus:  Give the billion dollars back to the taxpayers as REQUIRED by the Idaho Constitution.  Period.  That’s about an $800 to $1,000 refund for every man, woman, and child in Idaho. – FM Duck

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