*Hippies are only happy when everyone else is taxed, regulated, bored, and exactly like them.
The sunny state that was once known for having fun is now known for banning everything under the sun - including fun.
Apparently a Santa Clara ordinance now bans toys in kids meals. The reason? Toys allow fast food corporations to “prey” on little kids and make them want unhealthy foods.
What nonsense.
Once Californians were known for rebelling against their parents and the establishment, but now they are the establishment…and they want to be everyone’s parent.
Nevadans have been inundated with talk of high-density urban living, high speed rail and government taxes on the number of vehicle miles you drive, but are these the right solutions?
Randal O'Toole, senior fellow with the Cato Institute and author of the book "Gridlock: Why Were Stuck in Traffic and What To Do About It" will be in Las Vegas May 5th for an NPRI Policy Luncheon to discuss traffic and transportation issues. The event will start at 11:30 am at the Las Vegas Country Club on May 5th. Tickets are just $30, but seating is limited. Please call NPRI at 702-222-0642 to reserve your seat.
Until then, satisfy your curiosity with another video of O'Toole discussing his new book on Fox News.
Americans will be shocked, shocked! to discover that experts at the Health and Human Services Department have concluded that ObamaCare will NOT lower health care costs.
Economic experts at the Health and Human Services Department concluded in a report issued Thursday that the health care remake will achieve Obama's aim of expanding health insurance -- adding 34 million to the coverage rolls.
But the analysis also found that the law falls short of the president's twin goal of controlling runaway costs, raising projected spending by about 1 percent over 10 years. That increase could get bigger, since Medicare cuts in the law may be unrealistic and unsustainable, the report warned.
Now the real question is whether or not this report was suppressed until Congress could take a vote on ObamaCare. That wouldn't be surprising, after all, the report supporting the DC voucher program was suppressed last year until AFTER congressional Democrats all but killed the program.
The Las Vegas Sun now reports that Nevada is facing a $2.5 billion shortfall that could slash state budgets in half. Previous estimates in the newspaper (and elsewhere) put the shortfall around $3 billion. If you’ve been following Geoff Lawrence recently you’d know that was a bunch of nonsense.
The latest attempt simply sums up all the previous gimmicks from tax increases, budget cuts, fund sweeps and other short term band-aide fixes. It adds up to $2.5 billion – but this is bad budgetary math.
This estimate is calculated by state Budget Director Andrew Clinger using a patchwork of assumptions about the 2011-2013 budget cycle. Clinger's major assumption is that adjustment decisions in the 2009-2011 state budget should be applied automatically to the ensuing 2011-2013 budget. Thus, he has attributed all of those adjustments (including expiring tax hikes and furlough programs) to come up with a $2.4 billion estimate.
This approach, of course, assumes that 2009-2011 spending levels are necessarily appropriate for the 2011-2013 cycle. In truth, any "shortfall" projection is the result of a flawed budgeting process that assumes that the state should spend more money than it has.
Even so, assuming the baseline approach is appropriate, Clinger's current calculation does not conform to that approach. Instead of subtracting expected revenues from the desired spending amount, he is making assumptions about the adjustments made in the current cycle. For instance, there is no reason to believe that a furlough program for state workers would not be continued into the next cycle.
In fairness, Clinger is likely using this patchwork of assumptions because no official estimate for state revenues yet exists. However, it is reasonable to assume that revenues would be in the $5.0 - $5.5 billion range. Assuming a $6.4 billion budget (about what we spend now), therefore, a simple subtraction would yield far less than a $3 billion shortfall.
It also looks like there is some double-counting within Clinger's reported calculation. The Sun reports that $939 million in new revenues from the 2009 tax hikes will expire in addition to $220 million in revenues from the room tax hike being moved out of the General Fund. However, the $939 million number should include the $220 million in room taxes. Moreover, the room tax revenues will be moved out of the General Fund and serve as a dedicated revenue stream for K-12 education. This should partially offset the need for General Fund dollars to supplement local K-12 spending, meaning that the $220 million is unaccounted for.
The key lesson here is that budget shortfall calculations frequently amount to little more than an intellectually dishonest endeavor.
As Geoff Lawrence has shown, current iterations of this flawed exercise are not in sync with reality. Even if one buys into the cost-plus, baseline process and the resultant "shortfall" scenario, it is highly dubious whether the size of that shortfall would approach $3 billion.
Instead of trying to calculate these budgetary shortfalls we should prioritize spending and fund what works, rather than continue this outdated, backward and dishonest budget process that has laid the state into an unsustainable quagmire.
*Dramatization of teacher union official blocking the path of a noble education reform crusader.
Teacher union and stakeholder support is worth 70 out of 500 points in Obama's "Race to the Top" application. A lack of support from the local teachers union in Florida cost the state enough points to place second - and win hundreds of millions of dollars.
Education reformers feared that RTTT scoring gave a lot of veto power to local unions that would result in watered down - if not meaningless - reforms. Those fears may be founded as Indiana and Kansas have dropped from the race - citing a lack of local union support (they now join Alaska and Texas which refused to participate in Round 1).
The teachers union in Massachusetts withdrew its support of the state's RTTT application citing disagreements over how to turn around low performing schools. Pending Legislation in Colorado will change how the state evaluates teachers, but this has caused the teacher unions in Colorado to withdraw support from the state's application as well. Additionally, the teachers union in Florida pressured the Governor into vetoing legislation that would have tied teacher evaluations to student test scores - before this, Florida had the support of less than 10 percent of the unions in their RTTT application.
Union support isn’t the only factor for winning RTTT – but it is an important one.
Whitney Tilson from Democrats for Education Reform has produced a 240-page presentation outlining the problems with public education and some sensible solutions to improve quality and help students achieve.
So what's going on?
1) We spend a lot of money. 2) We don't get a good return on our education investment. 3) Education results have stagnated for decades. 4) We are falling further behind our global competitors. 5) Our racial achievement gap is widening. 6) Public education is unaccountable, inflexible and uncompetitive. 7) Wealthy, entrenched special interests defend the status quo out of self-interest and self-preservation, not to help the children.
Stanford University's sponsored charter school is being shut down for consistently poor performance. Not surprising, since Stanford’s ed school hates standardized testing and is more concerned about students feeling good. It's nice to see the Ivory Tower actually test theories in the real world. Of course, to many in the education establishment, falling on your face is always someone else’s fault.
The perfect storm of big government and out of control and unsustainable entitlements is set to bankrupt our country in 10 to 20 years if nothing is done to rein in government spending.
The size of Nevada's budgetary "shortfall" heading into the 2011 regular session is highly disputable. First, a budget is simply a plan to spend money and any "shortfall" is, therefore, the result of a plan to spend more money than is available. The most appropriate way of addressing any such "shortfall" is to adjust the spending plan so that funds are allocated to their most cost-effective uses.
Unfortunately, Nevada's budget process does not offer a lot of flexibility for doing this, as I note in today's commentary at npri.org. Over the next few days, I will outline an alternative budgeting process known as Budgeting for Outcomes and detail how that approach can be used to address the state's fiscal position in the 2011 session. This is a "How-to Guide for Budget Reform" that will lay out the principles of rational budgeting for lawmakers.
However, lawmakers should also be aware as they head toward the 2011 session that the typical media claims of a "$3 billion shortfall" are completely counter-factual. These claims rely on the inaccurate presumption that state General Fund spending for the current budget cycle would amount to $7.9 billion. This is simply not true. This assumption is based on the idea that the "baseline" originally approved by the 2007 legislature should be carried over into the next budget cycle instead of the current baseline.
Not only is this counter to standard baseline budgeting practice, but the 2007 baseline was never actually realized. Two special sessions during that budget cycle were called in order to reduce General Fund spending. By consequence, the "$3 billion shortfall" estimate is not only based on something that does not currently exist — it is based on something that has never existed.
If lawmakers are to continue under the broken baseline budgeting process, they should at least acknowledge that the baseline has changed through the past three special sessions and one regular session. In fact, General Fund spending during fiscal year 2011 is scheduled to be about $3.1 billion. If the same level of spending were carried over into the 2011-2013 budget cycle, that would amount to $6.2 billion while revenues are likely to be in the $5.5 billion range. (No revenue estimates are official until the December meeting of the Nevada Economic Forum.) Allow me to demonstrate this mathematically:
$6.2 - $5.5 ≠ $3.0
Even if spending programs formerly existed within the General Fund that are no longer present, it is inappropriate under baseline budgeting policies to incorporate programs into the baseline which do not currently exist. That effectively amounts to the inclusion of new spending into the baseline.
Likewise, so-called "roll-up costs" that have routinely added upwards of $1 billion to the baseline in recent years are not justified under present conditions going into the 2011-2013 budget cycle. The most significant components of these "roll-up costs" are for caseload adjustments and annual employee pay raises. In many areas, caseloads in Nevada are in decline for the first time in decades. Similarly, given the current deflationary trend that has seen historic declines in private sector personal income, there is little rationale for extravagant, across-the-board, public sector pay raises - especially when a portion of those pay raises are for a purported "cost-of-living adjustment." Instead, lawmakers should recognize that public sector employees in Nevada already are paid 28.1 percent more, on average, than their private sector counterparts in similar job classifications, and that this disparity is increasing.
The lesson to be taken out of all this is that claims of a "$3 billion shortfall" are unfounded and fallacious. However, the Silver State is capable of getting much more for the money that it does spend but this will not happen until the state adopts a more rational budget process such as Budgeting for Outcomes.
America's history is far from perfect. There have been many instances where American policymakers (on all sides), businessmen, community activists, sport stars and religious leaders have tarnished our history by committing evil acts against other human beings. We need to remember our darker side so we can better understand how we got here. More importantly, we need to remember the darker side of American history so we know where to go from here.
The Florida Legislature passed a sweeping tenure-reform bill that would have 1) eliminated tenure for new teachers by putting them on one-year, renewable contracts; 2) required teachers to prove that their students actually learned more in the current year than in the previous year; and 3) required school districts to offer merit pay rather than offer bonuses for extra degrees or the number of years spent in the teaching profession.
Sounds like common sense, but Governor Charlie Crist (R) - who was initially supportive of tenure reform and merit pay - turned against the bill and vetoed it Thursday morning. Critics contend this was done to differentiate himself from Marco Rubio, Crist's Republican primary opponent in the U.S. Senate race.
The Progressive Leadership Alliance of Nevada is promoting a new study from the left-leaning Institute on Taxation and Economic Policy based in Washington, DC. ITEP regularly produces rankings of the state tax systems, with those tax structures that are more progressive receiving higher rankings. Not surprisingly, then, ITEP's standard recommendation is that states should either implement or expand the relative importance of a progressive income tax. This makes Nevada and other states that impose no personal income tax a favorite target for ITEP.
Apparently the analysts at ITEP have missed an important characteristic of the seven states that impose no personal income tax (Nevada, Florida, South Dakota, Texas, Tennessee, Washington and Wyoming): growth in these states has far outpaced the national average over the past few decades. Personal income taxes that more punitively penalize highly-productive workers discourage those individuals from working or can encourage them to relocate to states that do not have progressive income taxes. Penalizing high earners also impinges on capital accumulation which prevents gains in labor productivity - leading to welfare losses across all income brackets.
The unilateral focus that ITEP places on progressivity causes their analyses to lose sight of some important aspects of tax policy that should not be overlooked. Tax policy has a direct impact on economic performance and can affect economic decision-making through several dynamic channels. An optimal tax structure should seek to accomplish four primary goals: (1) ensuring economic efficiency by minimizing tax-induced distortions in economic behavior; (2) minimizing compliance costs through simplicity; (3) minimizing volatility; and (4) ensuring vertical and horizontal tax equity.
ITEP's recommendations essentially discard the first three of these goals in order to accomplish a portion of the fourth - vertical tax equity. This is not good tax policy. (A forthcoming policy study by NPRI will demonstrate how it is possible to achieve all of these objectives.)
One of the primary selling points that ITEP uses for its simplistic recommendation is the promise that state taxpayers would pay less in federal taxes - even if they pay more in state taxes. This is because state tax payments are deductible on federal income taxes.* Yet, the impact that tax policy has on economic performance will exist regardless of which level of government receives the tax.
*Deductions are different than tax credits. A deduction means that the gross adjusted income upon which the tax is assessed can be reduced. It does not mean that the taxpayer receives a one-for-one credit on their federal return for state taxes paid. Hence, there would still be a significantly larger overall tax burden even though federal share would be slightly less.
Dr. Stephen M. Miller and Dr. Elliott Parker — economics professors at UNLV and UNR, respectively — claim that Nevada needs to overhaul its tax collections in order to survive and thrive. Unlike state policymakers who make this claim, Miller and Parker — though wrong — are at least brave enough to make some policy recommendations, including adding personal and corporate income taxes and a value-added tax.
They believe that our tax system is too reliant on sales and gaming taxes. A more diverse tax code, they think, will bring in more revenue and enable the Silver State to continue to provide basic services.
The problem is, both California and Arizona have broad tax bases, and both states are struggling just as much as Nevada. Higher taxes aren’t the answer. In fact, California has a larger tax base and is not only struggling to provide basic services, but is bleeding private-sector jobs as well.
So, Dr. Miller and Dr. Parker, if new and higher taxes is the answer, why are California and Arizona still struggling?
Sean Whaley, capital reporter for the Nevada News Bureau, has an excellent article today detailing the true unfunded liability faced by the Nevada Public Employees' Retirement System. If the system is evaluated using a market-based accounting system, the true size of the unfunded liability is $33.5 billion - not the $9.1 billion that is officially reported.
Whaley's article comes days after this point was highlighted by a recent NPRI commentary.
The Florida state Assembly passed a bill, 95-23, to expand the Step Up For Students corporate tuition tax credit program, which sends 25,000 low-income children in Florida to any public or private school of their parents' choice. The bill, which has had strong bipartisan support in both houses, now goes to the governor, who will likely sign it.
When it goes into law, the tax-credit donation cap will be extended to $140 million (and then grow another 20 percent, if donations reach 90 percent of the $140 million cap). Scholarships will also be lifted from $3,900 to 80 percent of the state's per-pupil funding — which is low-balled at just $6,866 per pupil.
Opponents have argued that the tax credit takes money out of the coffers of local public schools and leaves them with fewer resources. But technically, this isn't true at all. The U.S. Department of Education estimated that Florida spent $11,077 per pupil in 2006-07 (this includes capital costs and debt repayment). That means for every child who takes the new scholarship and attends a private school, the state and school districts save at least $5,584 — meaning they actually have more money to spend on the children who remain in the traditional public schools.
Stuart Buck, over at Dr. Jay P. Greene's blog, takes on Diane Ravitch - an NYU professor who has turned against education assessments and school choice, which she supported previously, to become a darling of the far left, which opposes those reforms. Recently, Ravitch released a book (“The Death and Life of the Great American School System: How Testing and Choice Are Undermining Education”) attacking charters, vouchers and testing. She has written numerous columns, and her opinons have been covered by the Las Vegas Sun and Vegas PBS.
How can you be against government-run health care when you're depending on Medicare? Hypocrite.
I'd been planning to blog my response to this oft-repeated point when I read the perfect answer in Wednesday's Letters to the Editor section of the RJ.
To the editor:
In his March 31 letter, Robert Bencivenga states that attendees at the March 27 Searchlight Tea Party event who are over 65 and collecting federal benefits through Medicare were hypocrites.
Let me get this straight: These people were forced into a program where the federal government took money from every paycheck they earned and, in return, promised a benefit if they reached a set retirement age.
Now, after all the years of forced participation, they are cashing in on this investment, and they are hypocrites?
Seems to reinforce the idea of privatization for me. I wish I had all the money the government has collected "for" me over 40 years of working and paying in. Wonder what that would be worth today?
DON DIECKMANN
HENDERSON
Well said, Don.
Liberals, you shouldn't be surprised/shocked when the people you've taken money from for 40-plus years while promising retirement benefits actually expect you to fulfill your promise.
California's three major public pension funds are underfunded by more than half a trillion dollars, according to a report released Monday, the San Jose Mercury News reports.
Gov. Arnold Schwarzenegger (R) commissioned the study, which was prepared by graduate students at the Stanford Institute for Economic Policy Research…
Researchers tallied CalPERS' unfunded liabilities at $239.7 billion and CalSTRS' liabilities at $156.7 billion.
The new figures are significantly higher than previous estimates from the pension funds. In July 2008, CalPERS estimated its unfunded liabilities at $38.6 billion and CalSTRS estimated its liabilities at $16.2 billion (AP/Ventura County Star, 4/5). The Stanford report suggests that California would need to put $360 billion into its pension and health benefit systems immediately to have an 80% chance of meeting 80% of the obligations within 16 years (Contra Costa Times, 4/5).
[Andrew] Biggs [of the American Enterprise Institute] determined that a market valuation of Nevada PERS assets using an economically sound "options pricing" method of accounting for risk reveals a total unfunded liability of $33.5 billion. At current levels, that would amount to roughly 10 years' worth of state General Fund spending! To put it another way, market-priced unfunded pension liabilities amount to 32 percent of state Gross Domestic Product.
According to Biggs' analysis, the probability that PERS' assets will be sufficient to cover accrued liabilities is only 6 percent for police and firefighters and 10 percent for regular employees.
With a $33 billion liability staring it in the face, Nevada needs a defined-contribution pension system immediately. Let's not wait until our problems are as large as California's before we reform this broken and outdated system.
"Oil Millions Didn’t Make Jethro Smart," writes Dr. Matthew Ladner of the Goldwater Institute, referencing the billion-dollar windfall Wyoming received because of a booming natural-gas industry.
Spending over $16,000 per pupil (including capital costs and debt repayment), Wyoming sees its students tie Florida's Hispanic students on the National Assessment of Educational Progress' fourth-grade reading test. Florida spends $5,000 less per pupil.
*Light rail, clearing traffic congestion one accident at a time.
Randy O'Toole of the Cato Institute released a report titled "Defining Success: The Case Against Rail Transit," which highlights the many reasons why public rail transit almost always fails. "Defining Success" serves as a good antidote (one of many, really) to the Sonoran Institute's recent report on "smart" growth and urban planning. That report was sponsored by the Progressive Leadership Alliance of Nevada and the Sierra Club.
Their idea of managing growth in southern Nevada is simply to control human behavior. To accomplish this social engineering, they want to force people into more high-density, urban condos - like City Center. This is done so other urban projects - like public rail transit - are more likely to be sustainable. Essentitally, "smart growth" is nothing more than top-down micromanagement to redesign people around progressive ideals - rather than designing ideals around what the people want.
Fortunately, public rail transit fails so miserably - even in places already engaging in "smart growth" - that we know for certain such a system would fail in southern Nevada. In fact, the recently built $1.4 billion light rail system ($70 million per mile) in Phoenix is scheduled to lose $144 million over the first five years, and this doesn't even include the money owed to repay the $1.4 billion in bonds.
From the executive summary of Cato's report:
Over the past four decades, American cities have spent close to $100 billion constructing rail transit systems, and many billions more operating those systems. The agencies that spend taxpayer dollars building these lines almost invariably call them successful even when they go an average of 40 percent over budget and, in many cases, carry an insignificant number of riders. The people who rarely or never ride these lines but still have to pay for them should ask,"How do you define success?"
This Policy Analysis uses the latest government data on scores of rail transit systems to evaluate the systems' value and usefulness to the public using six different tests:
Profitability: Do rail fares cover operating costs?
Ridership: Do new rail lines significantly increase transit ridership?
Cost-Effectiveness: Are new rail lines less expensive to operate than buses providing service at similar frequencies and speeds?
The "Cable Car" Test: Do rail lines perform as well as or better than cable cars, the oldest and most expensive form of mechanized land-based transportation?
The Economic Development Test: Do new rail lines truly stimulate economic development?
The Transportation Network Test: Do rail lines add to or place stresses upon existing transportation networks?
No system passes all of these tests, and in fact few of them pass any of the tests at all.
And one more good reason to avoid federal dollars to build public rail transit: The government imposes massive penalties for canceling rail projects once you take the money. In fact, it is cheaper to operate at a loss every year than to repay the federal government, which is why almost no public transit rail systems are shut down.
Andrew Coulson at the Cato Institute wrote an excellent article in the Wall Street Journal about Escalante's life and struggles as a teacher. The highlight of the article is the realization that the status quo stands in the way of great teachers like Jaime Escalante, effectively preventing them from teaching students.
Coulson writes:
With the help of a few dedicated colleagues at Garfield High in East Los Angeles, he shattered the myth that poor inner-city kids couldn't handle advanced math. At the peak of its success, Garfield produced more students who passed Advanced Placement calculus than Beverly Hills High.
In any other field, his methods would have been widely copied. Instead, Escalante's success was resented. And while the teachers union contract limited class sizes to 35, Escalante could not bring himself to turn students away, packing 50 or more into a room and still helping them to excel. This weakened the union's bargaining position, so it complained.
By 1990, Escalante was stripped of his chairmanship of the math department he'd painstakingly built up over a decade. Exasperated, he left in 1991, eventually returning to his native Bolivia. Garfield's math program went into a decline from which it has never recovered. The best tribute America can offer Jaime Escalante is to understand why our education system destroyed rather than amplified his success — and then fix it.
Read the full article, "Escalante Stood and Delivered," at the Cato Institute's website. Reason Magazine has another article that highlights Escalante's struggles with the education establishment. Read "Stand and Deliver Revisited" at Reason.com
Round 1 of Race to the Top (RTTT) is over, and reform fan-favorite Florida has been bested by Delaware and Tennessee. Florida lost a significant amount of points because the state’s application lacked “stakeholder” support – especially among the teacher unions.
However, there is another element to the scoring – human bias. Some of the reviewers appear to have almost nit-picked Florida to death. One reviewer witheld points because Florida didn’t explain which of its MANY reforms produced the dramatic results. Points were also withheld because Florida failed to articulate how it would improve student achievement for Asian and Native American students (Florida’s application highlighted its proven ability to raise achievement levels for all students, plus Hispanic, black and low-income students in particular).
One reviewer docked points because the reviewer felt Florida planned to reduce the achievement gap by “holding the achievement of white students constant over the life of the grant.” For example, Florida promised to improve the level of its already high-achieving fourth-grade white students from 81 percent basic or better to 85 percent basic or better, while low-income and minority students were given a more ambitious goal. Another reviewer withheld points for a similar reason, stating, “[Florida] is closing its achievement gap, in part, by letting the top flounder.”
Flounder? Really? Florida not only manages to improve student achievement across the board, but it does so while also increasing the number of high-achieving students. And frankly, if Florida is letting the top “flounder,” what is the RTTT winner - Delaware - doing?
While Delaware has posted dramatic gains in student achievement on the National Assessment of Educational Progress, that state has been relativly stagnent over the last few years. Delaware may have an ambitious plan for improving achievement and closing achievement gaps, but it hasn't accomplished this in the last six years - at least not like Florida. Despite this, Delaware seems to earn just as many points as Florida on "demonstrating significant progress on improving student achievement," a category worth 30 of the 500 points in the RTTT application.
Compare for yourself with the charts below (click on the graph to bring up a larger image):
PERCENTAGE OF STUDENTS SCORING BASIC OR BETTER
FLORIDA
*Source: U.S. Department of Education. FRL = Free and Reduced Lunch. Students eligible for the Free and Reduced Lunch program are considered low-income students.
DELAWARE
PERCENTAGE OF STUDENTS SCORING PROFICIENT OR BETTER
Write on Nevada is the blog of the Nevada Policy Research Institute. NPRI promotes free-market public policies and individual liberty in the Silver State. For more information visit npri.org.
The opinions expressed on this website are those of the individual authors and should not be construed as the official view or position of the Nevada Policy Research Institute.