What to do with the surplus?

Governor Haslem gave his annual state of the state address last night. I did not watch the speech, but I have read a follow-up news article in the state’s paper of record, the Commercial Appeal, and the first thing that caught my eye is how the governor plans to spend a $746 million budget surplus built up from last year and this.

Those recommendations include $184 million for new construction at the state’s public colleges and universities, $75 million in improvements to existing campus buildings, $130 million to the transportation fund and $107 million in new construction and maintenance of other state buildings and parks.

Normally I would not have a problem with any of this. At least the governor isn’t proposing to grow the size of government. What I do have a problem with is that the governor is aiming for an increase in the gasoline tax next year. It makes no sense to raise taxes when the state is running budget surpluses. A better way to sell this would be to take a portion of the surplus and use it to cut a penny, or even a half-penny from the sales tax or grocery tax. It would be far more palatable to say to the taxpayers that we need to raise the gasoline tax because the state has fallen behind in road construction and improvements, but we’re going to cut taxes over here as an offset. The legislature still has to approve any such spending that the governor proposes. We’ll see how it turns out in a few months.


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