Sunday, May 6, 2007

End Spiralling Taxes??

I see I tend to post about once a month. Maybe that is a natural cycle. Are we getting close to a full moon? Oops. Yes, 2 May.


Anyhow, a recent correspondent inspired the following idea: What if we established escrow accounts for departmental managers to retain unexpended funds and rewarded them for the growth of those escrow funds, while reducing the budget to the level of the actually expended funds.

Here is the thought in detail:

> More taxes for Newport , at this point is akin to believing that pouring
> ever more amounts of water into a sieve is an effective way increase its
> ability to transport water.

What is absolutely amazing to me is that people will sign up to the concept that more taxes are inevitable.

I've stated before, with examples, that all forms of government that I've ever seen are totally bloated. (Duh, I'm not the first to notice this...)

Let me loose on the local budget and I'll bet you a bundle I could slash it in half, without raising a stink from anyone, because they'd say, "well, yes, he's right." And because there would be far and away still enough perks in the budget to satisfy all comers.

(Budget users are usually not overly greedy people, they just don't want to see their personal ox gored, at least not unless everyone else's ox is being obviously and equally gored, and as long as they still have a reasonable amount of an ox left over...)

I dare anyone who has had any proximity to a government budget of any kind, be it federal, state, or local, to deny the existence of the end-of-period frantic "Use it or lose it" mentality:

"We need to obligate this money or we won't get the same amount next year."

Well, duh. If you don't need it this year, you prolly won't need it next year, so how about saving it?

Well, because then "Your budget, Mr. Manager, won't be so big, and people will think you are not good at feeding at the public trough for 'our children' (or whatever other expediently politically correct slogan is available) so you might get fired."

:-( Hence spiralling budgets and taxes.

How about a change in mentality to protect and promote those who reduce their budgets?

For example: how about establishing departmental escrow accounts? Whatever is not spent remains under the control of the manager, but is transferred from operating funds to an escrow account, which can be invested under a ruleset to accrue interest and be available for future emergency expenditures, but at the same time be removed from the "budget".

(There are already methods for establishing multiyear funds, but these still do not provide an incentive for saving. They just defer the end-of-cycle panic to the out-years...)

The "budget" would then be based on the actual expenditures, but the incentives and promotions would be based on the growth of the escrow fund: the less he spends, the more he saves in his escrow account, the more he is rewarded.

Don't take the savings from him, since that will demotivate him, rather reward him for saving it.

Then the central government can reduce his budget according to the size of the escrow and collect the interest on the escrow, but still reward him for fiduciary stewardship AND save money.

Then set some maximum threshold and special controls for the consumption of the escrow, perhaps using the CPI or some other device so that responsible use can be made of the escrow, but still allow punishing budget expansions (or growth in expenditures beyond some reasonable threshold) and continue to reward frugality...

The end effect would be the following:

+ The actual expenditures would be reduced
+ The escrow accounts would grow
+ The actual budgets would shrink, and with them the taxes.

And there would be a huge sigh of relief from the 99.9% of managers who hate the current system but don't have any other way of dealing with it:
Hey, managers are people too. They need to get ahead and feed their families. So why not let's figure out a way to let this happen and protect the public?
And, most importantly, the true public needs would be met, without bloat.

Too bad the founding fathers were not clever accountants. They got almost everything right, except budgets. I'm not an accountant, but I recognize bloat, and bloat is no friend of mine.

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